Metro Bank axes fee-free spending in Europe – here is the place to change

Metro Bank has started charging customers to use their debit cards across Europe.

The high street bank previously allowed customers to spend on their debit cards and make cash withdrawals in Europe free of charge.

However, the rules, which changed on 29 August, mean customers are now charged 2.99 per cent fee on all debit card transactions outside of the UK.

Cash withdrawals will also incur a 2.99 per cent fee plus a £1.50 ATM fee.

It means that if you spent £500 with a Metro Bank card on holiday you would pay £14.95 in fees, and if you withdrew £200, you would pay an extra £7.48.

The median foreign transaction fee faced by debit card holders is 2.75 per cent according to Fairer Finance, while credit card holders can typically expect a charge of 2.95 per cent.

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 made changes. In 2016, Metro Bank increased transaction fees from 1.9 per cent to 2.5 per cent for customers using their credit and debit cards overseas in a bid to keep them free in Europe.

Now Metro Bank, which has around 3million customers, will be one of the high street banks to charge customers to use their card in Europe.

Some of these customers are likely to have the current account for the fee-free spending, having opened it for that very purpose – and could be caught out if they are unaware of the change.  

A spokesman for Metro Bank said: ‘Over time we’ve seen our customer’s needs and expectations evolve and the demand for this service has been declining over a number of years.’

The lender was beset with issues last year when it revealed it had plans to cut up to a fifth of its workforce.

Analysts said that while it had successfully built a significant customer base, it had struggled to make money while interest rates were low.

Last October, it announced it had agreed a £925million refinancing deal.

As well as an overhaul of its transaction fees abroad, Metro has also made sweeping changes to its credit card offering. 

From today, the lender is cancelling 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 move over to a new credit card provider, particularly if they have ongoing payments linked to their Metro credit card.

The bank announced the decision earlier this year, telling customers: ‘After a recent review of our personal credit card, we’ve made the decision to withdraw this product from sale.’

When it launched, it said branches would be open seven days a week. However, many branches no longer offer this – including Chelmsford, Essex, which had its hours changed back in March. 

Which banks are the best to use abroad?

When challenger banks like Monzo and Revolut burst onto the scene, they too lured new customers in with the offering of fee-free spending abroad.

It meant that plenty of consumers, particularly those who travelled frequently, opted to open a secondary account with them to use abroad.

Monzo customers can use their debit card for free abroad, but they can only withdraw £200 free per 30 days (when outside the EEA) and anything over that comes with a 3 per cent charge.

Monzo Plus account, which costs £5 per month, allows customers to withdraw up to £400 for free, anywhere abroad, each month.

Revolut offers a prepaid card which allows customers to deposit money into their account and lets them choose to exchange into the currency of their choice.

It means customers can lock in an exchange rate before they travel, or they can leave it in sterling and Revolut will apply the exchange rate when a transaction is made.

Revolut’s free account only allows for up to £200 to be withdrawn each month, with a limit of five withdrawals. After that, customers will be subject to a 2 per cent fee, with a minimum charge of £1.

Customers who opt for a £6.99 a month account will see this limit doubled to £400.

Chase Bank, a challenger backed by JP Morgan, is also popular among frequent flyers due to the fact that it has zero fees and charges when used abroad.

There are also no charges for cash withdrawals at ATMs anywhere in the world, although customers are limited to £500 worth of withdrawals each day.

Chase also allows new customers to earn 1 per cent cashback on all eligible debit card spending during the first year of having an account, which includes spending abroad and when booking flights.

Starling Bank’s current account offers fee-free debit card withdrawals and card spending abroad. However, it limits cash withdrawals to six a day, with a daily limit of £300.

High street banks have also followed suit. Last year, First Direct, owned by HSBC, scrapped fees for debit card customers making payments or cash withdrawals abroad. However, there is a daily cash withdrawal limit of £500 at ATMs.

HSBC customers with a Global Money account, and is open to those with an HSBC current account, can also spend abroad and withdraw cash without incurring charges.