Understanding using debit and credit cards abroad

lingojourney

I have a question about exchange rates and bank cards.

A) Looking at the NatWest website and at the time of this post, 2013-03-15 15:00, the mid-rate for JPY/GBP is 145.02, the natwest selling rate indicates that the selling spread is (145.02-134.50)/145.02 = 7.25%, this is quite a bad rate in any standard. So, for £100 worth of a foreign currency, I am paying £107.25 for it.

Looking at this NatWest website, the NatWest foreign ATM charge 2% (cash advance fee) + 2.75% (exchange rate fee), so, a total of 4.75%. So, for £100 worth of a foreign currency, I am paying £107.25 for it.

So, on the surface it seems sensible to use debit card for cash withdrawal, but thinking about it, what rate will I be charged? The mid-exchange rate? The "bureau de change" rate as in "A" (If so, a combined charge is 4.75+7.25 = 9% is madness)? Or something else (I have heard there is also an eletronic trasfer [spread] rate which is lower than the cash one)?

I am just getting really confused. Someone helps me pleae

benjus

When you use a credit or debit card abroad, the base exchange rate is set by the card network (Visa/Mastercard). This base rate is pretty much equal to the mid-market spot rate. The card issuer (NatWest) can apply a "loading" to this exchange rate (2.75%), and can also charge a fee (2%). So you would expect to pay £104.75 for each £100 worth of currency withdrawn.

I assume that the rate you saw on the NatWest website is the rate for people exchanging cash in a NatWest branch, which is set by the bank and is not typically very competitive.

zagfles

Get a fee free/low fee card, see the guide on this site or search the forum.