British expats to lose free withdrawals from foreign cash machines in Europe

by Ray Clancy on August 6, 2010

British expats who have enjoyed free cash withdrawals with their Nationwide account face having to pay after it announced it is to end its policy of free withdrawals from foreign cash machines.

Tens of thousands of expats, especially those living in France and Spain, used the Nationwide FlexAccount as it allowed them to withdraw euros from their British current account with a debit card without paying commission or fees.

Now though they will be charged a commission fee of 2% plus a £1 flat charge. Nationwide said the new charges, which start on November 01, are still very competitive as some banks levy up to 5% so FlexAccount customers withdrawing cash abroad are better off than those from other banks.

It is the second time Nationwide has downgraded the overseas benefits of the FlexAccount. In May last year the building society began charging a 1% fee on transactions outside Europe, but said cash withdrawals on the continent would remain free. It said that, in tough economic times, it had to pass on the 1% fee for currency conversions charged by Visa outside Europe.

On purchases in shops and restaurants abroad, debit card customers will pay a 2% conversion fee, while at ATMs there will be a 2% fee plus a £1 flat rate. The fee for credit card purchases abroad will remain 1%.

Nationwide has been frustrated by the number of customers who use the FlexAccount purely for travel purposes and who maintain their principal bank account elsewhere. It was also aware that many expats used the account rather than transferring money via a broker.

Of the 3.5 million people with a FlexAccount, only 1.2 million use it as their main account, Nationwide said.

Tony Phillips, who lives in Normandy, France, said he has had a FlexAccount for almost 10 years and when he moved abroad he found it useful for withdrawing small amounts via a cash machine. ‘I still earn some money in the UK and that goes into my FlexAccount. It meant I could withdraw money with my debit card in euros from my local machine as currency broker fees are not very competitive for small transactions,’ he said.

‘Now I won’t be able to do that and will have to either pay the new charges or try to find a good broker deal which means I won’t get instant access to my cash,’ he explained.

Expats also used the FlexAccount in other ways. ‘When my family come over to visit they used to put money into my FlexAccount before leaving the UK and then I could withdraw it for them with my debit card,’ said Jayne Grainger, an expat living near Marbella in Spain.

Asked if she thought that such a practice was perhaps an abuse of the system she replied; ‘No, I don’t think so. The reason I opened a FlexAccount was to take advantage of the terms and conditions. All the expats out here knew about it’.

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