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Metro Bank has started charging customers for using its debit cards across Europe.
Previously, the traditional bank allowed its customers to spend with their debit cards and make cash withdrawals in Europe without fees.
However, the rules, which changed on August 29, mean customers are now charged a 2.99 per cent fee on all debit card transactions outside the UK.
Cash withdrawals will also incur a 2.99 percent fee plus a £1.50 ATM fee.
The Metro is eliminating free admission in Europe despite being a great attraction for new customers
This means that if you spend £500 on a Metro Bank card while on holiday you’ll pay £14.95 in fees, and if you withdraw £200 you’ll pay an extra £7.48.
According to Fairer Finance, the average foreign transaction fee faced by debit card holders is 2.75 percent, while credit card holders can typically expect a charge of 2.95 percent.
When Metro Bank launched in 2010, it offered fee-free spending worldwide – a major draw to help sign up hundreds of thousands of customers.
However, over the years it has been introducing changes. In 2016, Metro Bank increased transaction fees from 1.9% to 2.5% for customers using its credit and debit cards abroad, in an attempt to keep them free in Europe.
Now Metro Bank, which has around 3 million customers, will be one of the main banks charging customers for using its card in Europe.
Some of these customers may have a fee-free current account, having opened it for that very purpose, and could find themselves in trouble if they are not aware of the change.
A Metro Bank spokesperson said: “Over time we have seen the needs and expectations of our customers evolve and demand for this service has been declining over a number of years.”
The lender was hit by trouble last year when it revealed it had plans to cut up to a fifth of its workforce.
Analysts said that while it had managed to build a significant customer base, it had struggled to make money while interest rates were low.
Last October, it announced that it had reached a refinancing agreement for 925 million pounds.
In addition to revising its foreign transaction fees, Metro has also made sweeping changes to its credit card offering.
Starting today, the lender will cancel all existing consumer credit cards, meaning customers will no longer be able to pay for any goods or services in-store or online using their card.
Existing customers will need to switch to a new credit card provider, especially if they have ongoing payments linked to their Metro credit card.
The bank announced the decision earlier this year, telling customers: “Following a recent review of our personal credit card, we have made the decision to withdraw this product from sale.”
When it opened, it was said that branches would be open seven days a week. However, many branches no longer offer this service, including the one in Chelmsford, Essex, which changed its opening hours in March.
What are the best banks to use abroad?
When challenger banks like Monzo and Revolut burst onto the scene, they also attracted new customers with the offer of fee-free spending abroad.
This meant that many consumers, particularly those who travelled frequently, chose to open a secondary account with them to use abroad.
Monzo customers can use their debit card for free abroad, but can only withdraw £200 for free every 30 days (when outside the EEA) and anything over that figure incurs a 3 per cent charge.
The Monzo Plus account, which costs £5 a month, allows customers to withdraw up to £400 for free, anywhere abroad, every month.
Revolut offers a prepaid card that allows customers to deposit money into their account and choose to exchange it into the currency of their choice.
This means customers can lock in an exchange rate before they travel or they can leave it in GBP and Revolut will apply the exchange rate when a transaction is made.
Revolut’s free account only allows withdrawals of up to £200 per month, with a limit of five withdrawals. After that, customers will be subject to a 2 percent fee, with a minimum charge of £1.
Customers opting for a £6.99 per month account will see this limit doubled to £400.
Chase Bank, a challenger bank backed by JP Morgan, is also popular with frequent travelers because it has no fees or charges when used abroad.
There are also no fees for ATM withdrawals anywhere in the world, although customers are limited to withdrawals of up to £500 per day.
Chase also allows new customers to earn 1 percent cash back on all eligible debit card spending during the first year of having an account, including spending abroad and when booking flights.
Starling Bank’s current account allows for debit card withdrawals and card spending abroad without fees. However, it limits cash withdrawals to six per day, with a daily limit of £300.
Traditional banks have also followed suit. Last year, HSBC-owned First Direct removed fees for debit card customers making payments or cash withdrawals abroad. However, there is a £500 daily limit on cash withdrawals from ATMs.
HSBC customers with a Global Money account, open to those with an HSBC current account, can also spend abroad and withdraw cash without incurring fees.
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