Non-Sterling Transaction Fees Explained: What Are They and How to Avoid Paying Them

Put simply, a non-sterling transaction fee is a fee charged on transactions made in a foreign currency. This could be when using a card outside of the UK or for purchases made online that aren’t in GBP. If a major domestic bank is the card issuer, then customers are likely to see both a foreign exchange margin and non-GBP transaction fee applied. It is possible to avoid non-sterling transaction fees and save money on foreign exchange by choosing the right provider – learn about that here.

When Are Non-Sterling Transaction Fees Charged?

You’ll usually be charged a non-GBP transaction fee to convert the currency if you use your card outside the UK. This includes:

  • In retail outlets abroad (e.g. shops, bars, restaurants)
  • To withdraw money from a cash machine outside UK
  • Buying items online in a different currency

What’s a Typical Non-GBP Transfer Fee?

Most major UK banks charge a non-sterling transaction fee of around 2.75% – 3%. Find a complete list of UK bank non-sterling transaction fees here:

Non-Sterling Transaction Fees
BankDebit CardCredit Card
Barclays¹2.99%2.99%
Halifax²2.95%2.99%
HSBC³2.75%2.99%
Lloyds⁴2.99% (+£1.50 for cash withdrawal)2.95% (+5% for cash withdrawal)
Nationwide⁵2.99%0% (+2.5% for cash withdrawal)
NatWest⁶2.75%0% (+3% for cash withdrawals)
Santander⁷2.95%0% or 2.95% depending on credit card (3% across all cards for cash withdrawals)

Fees are based on the cost of using the card abroad, unless otherwise stated when the fee relates to cash withdrawals. 

Just as they would in the UK, credit cards would also incur a cash advance fee if used for cash withdrawals – this is usually higher than the standard borrowing rate and should be the same abroad, though it’s worth checking with the provider if you plan on using your credit card for these purposes abroad. 

Nationwide, NatWest and Santander are the most attractive option when using a credit card to make purchases abroad – there are no non-sterling transaction fees, though they do charge for using these cards to withdraw cash overseas.

How do I Avoid Non-Sterling Transaction Fees?

Challenger banks and international money transfer specialists are seeking to reduce and even completely remove non-sterling transaction fees for their customer base. Compared to the major UK banks, take a look at the fee schedule of challenger banks when using a card abroad:

Non-Sterling Transaction Fees
Challenger Bank / FintechOverseas Purchase FeeOverseas ATM Withdrawal
Starling Bank0%0%
Revolut0%

0% up to £200 per month

2% when over £200 (standard account, higher limits for paid accounts)

Wise (formerly TransferWise)¹⁰0%

0% up to £200 per month

1.75% when over £200

When using a debit card overseas, none of the fintech providers charge a non-sterling transaction fee. Fee-free international cash withdrawals are also possible with all three providers, although there are limits on the amount customers can withdraw fee-free with Revolut and Wise.

  1. Starling Bank uses the exchange rate provided by Mastercard. Whilst the exchange rate margin is not publicly available, we estimate this to be somewhere between 0.5% – 1% from our calculations.
  2. With Revolut, users get the interbank exchange rate, i.e. the true exchange rate.
  3. With Wise, users get a small Wise margin applied to the foreign exchange, likely to be between 0.35% – 0.5%.

All three providers are a cheaper option than using a debit card issued by a major UK bank.

Online Purchases

There is another possible way to avoid non gbp transfer fees when you’re looking to buy something online which isn’t denominated in GBP. This is perhaps more suited to large transfers but you could pay via bank transfer. An international money transfer to the seller’s bank account would avoid non-sterling transaction fees. The only concern when making an international money transfer is the payment fee and the foreign exchange margin that is applied.

The best international money transfer companies generally offer fee-free international payments and provide a foreign exchange margin that is usually significantly cheaper than that offered by UK banks.

One thing to consider is that the process to reverse a wire can be more difficult than claiming a chargeback on a card payment. If you have a valid reason to dispute a purchase, such as goods not arriving, then claiming a chargeback can be a relatively hassle-free process. In order to reverse a wire, if you do not catch it in time before it credits the beneficiary, you require the beneficiary’s authority in order to debit the account.

The No.1 Tip When Using a Card Abroad

When you buy something overseas with your debit/credit card the merchant terminal generally asks if you want to convert your purchase to pounds sterling at the point of sale. Do not accept this. The merchant terminal usually charges a very wide foreign exchange margin (5%+). It’s generally preferred that you select ‘no’ and allow your card issuer to conduct the foreign exchange. You’ll likely get the Visa/Mastercard rate between 0.5%-1% or a rate that is even better provided by Wise or Revolut.

The same applies when using an overseas ATM – do not accept the currency rate provided by the ATM, trust your card issuer.

Final Comment – Non-Sterling Transaction Fees

For a long time, non-sterling transaction fees were part and parcel of using a bank card abroad. It would reduce the reliance on travel money but could incur expensive fees in the process. With the rise of digital nomads and expatriate living, many companies have tried to overcome the expensive costs which have traditionally been passed onto the end user. It’s now possible to pay zero non-sterling transaction fees by choosing the right payment provider.

 

References

Banks

¹https://www.barclays.co.uk/travel/using-debit-card-abroad/

¹https://www.barclaycard.co.uk/personal/credit-cards/card-fees

²https://www.halifax.co.uk/travel/help-guidance/using-debit-credit-cards-abroad.html

³https://www.hsbc.co.uk/international/using-your-card-abroad-fees-and-charges-explained/

https://www.lloydsbank.com/travel/using-debit-credit-cards-abroad.html

https://www.nationwide.co.uk/help/travel/charges-using-your-card-abroad/

https://personal.natwest.com/personal/life-moments/travel/spending-abroad.html

https://personal.natwest.com/personal/credit-cards/the-natwest-credit-card.html

https://www.santander.co.uk/personal/support/credit-cards/travelling

 

Challenger Banks / Fintechs

https://www.starlingbank.com/travel/

https://www.revolut.com/en-LT/help/making-payments/withdrawing-cash/does-revolut-charge-for-cash-withdrawal

¹⁰https://wise.com/help/articles/2935769/how-much-does-it-cost-to-withdraw-cash