Good news for travellers: Banks agree to drop travel money fees!

At last there is some positive news for the British holiday maker. After pressure from the Office of Fair Trading, banks and credit card companies have agreed to drop some of the charges they levy to holidaymakers buying foreign currency.

The banks and credit card companies have also promised to display other costs relating to foreign currency more clearly in their monthly statements. The OFT investigation which also found that companies offering 0% commission on foreign currency often build a mark-up in the exchange rate, so they are not actually providing the service free of charge, follows a super-complaint by the watchdog Customer Focus.

The watchdog's complaint said that converting £500 into euros could cost anything between £10 and £30, even though the service provided was essentially the same.

The changes announced today include:

Five companies - Lloyds, Barclays, RBS, Santander and the Co-op - which currently impose charges of between 1.5 and 2% if customers use their debit cards before leaving the UK to buy foreign currency, have agreed to scrap this charge. Consumer Focus estimates that this will save consumers £20m a year.Nationwide, HSBC, First Direct and Halifax Bank of Scotland do not charge such a fee.

Banks and card companies will also show separately on statements those charges which are incurred overseas, including the typical "loading fee" of nearly 3%, rather than hiding them in the cost of the items travellers have bought.

Lloyds Banking Group, including HBOS, HSBC, Co-op, Capital One, RBS and NatWest and American Express have agreed to implement this change by the end of 2013.

Nationwide, Barclays, Santander, RBS and NatWest - for debit cards only - already provide this information.

The OFT is also forcing currency businesses to review 0% commission offers and reveal what the costs true costs are to holiday makers.

At a time when many costs for British holidaymakers are escalating, this is very welcome news.

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