The Royal Bank of Scotland have bowed to pressure from a Guardian newspaper investigation that called for them to bring their international credit card charges in line with other providers.
The investigation, conducted in December found that RBS, Natwest and Tesco had been hitting customers with unexpected costs after effectively starting to charge their own exchange rates on purchases made using a credit card abroad.
Other card providers all use the rates provided by MasterCard and Visa, rates which were more favourable than the ones used by these companies.
RBS, still owned by the state revealed that a customer survey had prompted them to change their system from July 1st, a success for the newspaper and one that could save customers money over their summer holidays.
Tesco also backed down three months ago, claiming that they had made the changes “in response to customer feedback and to improve transparency”.
Nearly all of the UK credit card providers use the exchange rates provided by Visa and Mastercard, and these rates sit very close to the wholesale exchange rate. They also tend to be very favourable compared with other exchange methods and banks and card providers just add their pre arranged fee to each transaction.
Early in 2008 RBS and Natwest changed the wording in their terms and conditions to allow them to charge based on an exchange rate “determined by us”.
The Guardians research found that the banks were also not publishing the rates they were determining, unlike the MasterCard and Visa rates which are online at all times, and customers could only find out what they were by phoning up.
The Guardian noticed that the RBS/Natwest and Tesco cards were adding around 2% to every purchase, the equivalent of an extra £4 charged for every 200 Euros withdrawn.