How to avoid non-sterling transaction fees

United Kingdom By Western Union June 6, 2024

How to avoid non-sterling transaction fees

When you travel, send money abroad to loved ones, or shop on international websites, you’re likely to encounter non-sterling transaction fees. These fees are additional charges on any transaction made in a currency other than pounds sterling (GBP). Whether you’re buying a small souvenir on a holiday or making regular payments to a relative abroad, these fees can quickly eat into your budget.

Before you click pay or swipe your card, it’s essential to understand and manage these costs. We offer practical tips and strategies to help you minimise or completely avoid these fees, ensuring your transactions are more cost-effective.

What is a non-sterling transaction fee?

A non-sterling transaction fee is a charge applied by banks or credit card companies when you buy something or make a money transfer in a currency other than pounds sterling (GBP).

These fees occur when you’re using your card abroad for shopping or cash withdrawals, buying from international websites that charge in a different currency, or when sending money to someone outside the UK. These transactions involve converting money from one currency to another, triggering the non-sterling transaction fee.

Here are the reasons why this fee exists:

  • Compensating the bank or credit card issuer for the currency conversion service.
  • Covering risks associated with exchange rate fluctuations from the time you make the transaction to when it’s processed.

Non-sterling transaction fees are usually a percentage of how much you’re spending or sending and get added to the total cost. These fees can cost you up to 3% of each transaction you make in a foreign currency, depending on your bank and whether you are paying with a debit or credit card. For example, if you send £100 overseas, a 3% non-sterling transaction fee will be £3.

Steps you can take to avoid non-sterling transaction fees

Non-sterling transaction fees can quickly add up, especially if you frequently send money abroad. Imagine you need to send £1,000 every month to a family member to help them with their overseas living expenses. That 3% fee becomes £360 over the year, which could be put to better use.

To help keep these costs under control, here are some strategies you can follow:

1) Don’t make transactions in foreign currencies online

The best way to avoid non-sterling transaction fees when shopping online or making international reservations is to stick to sterling. Many global online retailers and booking platforms allow you to pay in your home currency. Choosing to pay in pounds can help you avoid the currency conversion fees charged by your bank or credit card issuer.

Many websites will automatically detect your location based on your IP address or allow you to select your country at the beginning of your browsing session. These sites will use dynamic currency conversion (DCC) to display prices in GBP and process payments in your local currency, helping you avoid extra charges. This also simplifies the shopping experience and makes it easier to budget.

Although this method helps you avoid conversion fees from your bank, the online retailer might use a higher exchange rate that includes a profit markup. This can increase the overall cost, so it’s best to compare the final price with what it would be if you used your bank’s conversion rates to ensure you’re saving money.

2) Use a multicurrency debit card

A multicurrency debit card allows you to hold, spend, and sometimes withdraw money in multiple currencies. Since the card automatically uses the local currency, there are no non-sterling transaction fees.

You should consider getting a multicurrency debit card if:

  • You travel frequently: A multicurrency debit card removes the need to carry different currencies and reduces conversion fees for your purchases abroad.
  • You make regular international purchases: Using a multicurrency debit card can help you save on fees and get better exchange rates.
  • You work abroad: These cards can simplify managing finances across different currencies without the hassle of opening bank accounts in each country.
  • You send money abroad: A multicurrency debit card can make sending money to family or friends in other countries easier and more cost-effective.

To get a multicurrency debit card, start by researching financial institutions that offer them. Once you’ve selected a provider, you can usually apply online, in a branch, or via a mobile app by providing the necessary personal information and documents. After approval, the card will be issued and mailed to you, or you might pick it up in person, depending on the bank’s process.

3) Exchange your money beforehand

Before you set off on your holiday or business trip, exchange your pounds into the currency of your destination. Converting your currency at airport exchanges or local services abroad can be more expensive due to higher exchange rates. By securing a competitive rate before you travel, you can avoid the non-sterling transaction fees and manage your spending more effectively.

Here’s how you can exchange your pounds:

  • Visit your local bank or post office: Most banks and post offices offer foreign exchange services at competitive rates. It’s a good idea to inform your bank or post office ahead of time to ensure they have your selected currency and amount available. You can also order your foreign currency online for home delivery or pick it up from a local branch.
  • Online currency exchange service: Online currency exchange services offer the convenience of ordering your foreign currency online and having it delivered to your home or a local collection point.

Overseas ATM withdrawals will often have a separate fee, which can be up to 2% on the debit card withdrawal. Carrying local currency in cash can help you avoid these fees and offers convenience, as some locations may not accept cards. When carrying cash, it’s best to use a money belt or a hidden wallet to keep your money safe.

Competitive transaction fees with Western Union

Western Union offers convenient ways to send money abroad without worrying about hidden charges. Whether you choose to send money online or use our money transfer  app, we’re here to make your international money transfers seamless and cost-effective.

FAQs about avoiding non-sterling transaction fees

How much are non-sterling transaction fees?

Non-sterling transaction fees can cost up to 3% of the transaction amount. The exact percentage can vary depending on the bank or credit card issuer you’re using. These fees cover the costs of converting the transaction amount into GBP.

When are the charges taken from the account?

Non-sterling transaction fees are usually charged at the time of the transaction. They are added to the amount of the transaction and reflected in your account statement as a single total amount.

How can I get a foreign transaction fee waived?

Having a foreign transaction fee waived can be done, but it’s not always easy. You will need to contact your bank or credit card provider to request a fee waiver. You can also enquire with your bank or credit card provider if they offer cards that don’t charge non-sterling transaction fees.