Tesco hidden fx rip-off

bigboyeast

This week I had a day trip to France.

Did a little checking on this site before travelling to see the extra cost of using my cards whilst abroad. Both my Tesco Credit Card and First Direct Debit Card claim to charge a 2.75% handling charge for purchase aboard. I didn’t have time to get a Nationwide or PO card so decided to take the hit.

On getting back I through I would work out the true cost of my new purchases so logged into Tesco Finance to get exchange rate they used. Imaging my surprise when I found that Tesco have effectively charged a 5.05% FX surcharge.

YES they only charge a 2.75% FX handling charge, but as of November last year they have changed their T&Cs so they no longer use the Mastercard FX spot rate, but use a spot FX rate they determine.

On the day of purchase Mastercard FX rate was 1.1985 (very close to the Euro spot rate on FT website). However, Tesco, after applying their 2.75% handling charged used a conversion rate of 1.1378. THIS IS A MASSIVE 5.05% SURCHARGE OVER THE PUBLISHED MASTERCARD EURO SPOT RATE ON THIS DAY.


Tesco have confirmed to me that they now use a spot rate lower than Mastercard and then they apply the 2.75% handling surcharge.


DON’T USE TESCO CREDIT CARDS ABROAD UNLESS YOU WANT TO BE RIPPED OFF


:mad::mad::mad::mad:

moonrakerz

bigboyeast wrote: »

DON’T USE TESCO CREDIT CARDS ABROAD UNLESS YOU WANT TO BE RIPPED OFF

All you have described above is in the Ts & Cs for this card (as you quote perfectly) and as you went ahead and used it you were deemed to be fully aware of this - why is it then a "RIP-OFF" ?

TFD_2

I'm shocked that such an ethical company as Tesco, that are unknown for making a profit can act in this way.

bigboyeast

I have used my Tesco MASTERCARD for over 3 years. On every trip I have made before this year I received the offical Mastercard rate (-2.75% loading) as posted on the Mastercard site. I would have expected to get the Mastercard rate when using a Mastercard.

I only found that Tesco changed the T&C in November by going to their site Today. It is hidden away in the small print They now say that you need to call them before you make a purchase to see what rate they are using at that time. It would appear that they now use a much lower rate than other Mastercards hence you get a much worst deal from Tesco. Even if Tesco did tell all their existing customers of this very subtle but very expensive change I'm sure it was hidden in one of the leaflets of changed T&C you sometimes get with your monthly statement. HOW MANY OF US WOULD READ AND UNDERSTAND THE IMPLICATIONS OF THIS SNEAKY CHANGE.

I have called both HSBC and First Direct with whom I have another Mastercard and Debit Card. They confirmed that they use the offical Mastercard rate on the HSBC Mastercards and the debit card rate is set using both the VISA and Mastercard rate. Both of which would have been significantly bettter than that offered by TESCO.

It would be interesting to see how many other Mastercards don't now use the published Mastercard rate. I would suggest we all check and let others know.

YOU HAVE BEEN WARNED ABOUT TESCO

chattychappy

Thanks, I'm quite surprised that something as significant as this has slipped under the radar. Think I'll do a a few sample purchases to see (I'm usually on Abbey Zero). It might be that the rate is not normally so skewed as this.

td_007

Thanks for highlighting this....a list of CCs that do not follow the official exchange is very much needed to warn of this sneaky trick!

zorber

Yet another tesco rip off exposed......

HouseHuntr

darren263 wrote: »

Excellent list.

What list ?

fozmcfc

Have a read of Darren's post, I can only assume they are some sort of spam bot.

bigboyeast

Just a quick update. Contacted Tesco Finance today. The “gentleman” was unable and unwilling to discuss how they get their daily FX rate. I asked to be put through to the Complaints Department but he said that they would be unable to help as well. :mad::mad::mad:


If I wanted to complain I had to put it in writing. So that will be my task today.

As I used the table on Martin’s excellent guide to “Cheap Travel Money” I decided to take a look at the T&Cs of some of the other cards he listed. This is what I have found:-

Alliance & Leicester - FX conversion at payment scheme provider rate
( now Santander ) (note load is now 2.95% note 2,75%)

ASDA (Mastercard) - FX conversion at payment scheme provider rate

Co-Op (VISA) - Reference rate by VISA

Halifax - FX rate set by payment system

HSBC (MasterCard) - Market rate set by MasterCard

Lloyds TSB - Visa or MasterCard rate

M&S (MasterCard) - Wholesale market rate

MBNA - Wholesale Market Rate

Mint - MasterCard rate of day

Nationwide (VISA) - Visa wholesale rate

Post Office - Rate set by MasterCard

Sainsbury’s - Rate set by payment system

Virgin Money - Wholesale market rate

Basically I cannot find anyone else who has moved away from using the official MasterCard or Visa wholesale rate except Tesco. They now appear to be setting their own FX rate which includes a hidden 2.25% load factor.

Just a point, Martin in his article picked on a number of debit cards as “Cards from Hell” because that have a spending penalty of £1 - £1.50 per transaction. Because of Tesco hidden FX load factor my trip cost me an extra £15.75 for using my card three times in one day. I would have been better off using one of Martin’s “Cards from Hell” or even using Auchan own Dynamic Currency Conversion rate of 1.15 rather than my Tesco Mastercard.

WHICH IS THE CARD FROM HELL

I intend to contact Martin via the news link on this site. This is one that I think he should have fun pursuing particularly as we are entering the holiday period.:money:

chattychappy

Have now done a comparison. Date of transaction in each case was 29 June.

Tesco (Mastercard)
US$ amount: $19.57
GB£ amount: £13.61
Exchange rate: 1.4379

Zero (Mastercard)
US$ amount: $10.90
GBP£ amount: £7.23
Exchange rate: 1.5076

So overall, the Tesco loading would appear to be a massive 4.8%.. which fits with the OP's analysis of 2.25% + 2.75%.

bigboyeast did us a great service for pointing this out.