New EU rules cut ATM costs for holiday-makers

New European Union legislation introduced this week gives consumers more choice about how to choose and manage their money on holiday.

Since Monday, under EU cross-border payments regulations, banks are no longer allowed to charge customers any more for withdrawing cash from ATMs in other EU member-states than they do at home.

In the past, AIB has charged €3.81 for withdrawals using debit or ATM cards with the Plus symbol within the euro zone, while customers using Bank of Ireland cards with the Cirrus logo to make cash withdrawals were charged 3.5 per cent of the transaction, subject to a minimum of €3.17 and a maximum of €11.43. The European average for withdrawing €100 from a cash machine was €4.

With flat fees per transaction, tourists withdrawing money directly from their bank account tended to take out large amounts each time, increasing the risk of loss or theft. "The regulations will make it safer for consumers. People who were concerned about the cost of withdrawing money were taking out lump sums, but now they can take out €50 here and €50 there and it won't cost any more than it does at home," says Ms Tina Leonard, manager of the European Consumer Centre.

"Before, when people were choosing their holiday money, the best thing to do was to top up your credit card, because most of them don't charge commission. That was always our advice," Ms Leonard adds.

A credit card in credit is a good option for people looking for a safe way to manage holiday money and is still the most cost-effective method of using plastic money outside the euro zone.

It is recommended that cardholders increase their credit limit before they go on holiday to cover extra expense and emergencies.

All cardholders should also take basic safety precautions such as carrying cards in separate places, keeping a list of emergency numbers if a card is lost or stolen, and making sure to remember the PIN number.

The new EU regulations on cross-border payments mean that charges for the use of credit and payment cards up to €12,500 must be the same whether the payments are made at home or in another member state. At some Irish banks, the only charges due before the regulations were introduced were cash advance fees for withdrawals from accounts not in credit.

The amount you can withdraw will vary but in some countries the maximum daily withdrawal limit is €317.

Outside the euro zone, cardholders should expect to pay a currency conversion charge of 1.75 per cent. In addition, they may face cash advance fees of around 3 per cent if the account is not in credit. The cost of the transaction is translated into euros at the exchange rate on the day the item is debited to the credit card account. The exchange rates are competitive and may be cheaper than changing money before you go.

If you are left with too much cash after your holiday, some banks will buy back foreign currency notes free of commission charges. Under AIB's buy back policy, the bank will buy back leftover notes for amounts up to €127 free of charges and at the same rate you bought them for.

Travellers' cheques are a safe but inconvenient option. Banks will charge a commission of 1 to 2 per cent when the cheques are bought. Overseas banks may charge further commission when they are cashed in, although they will tend to charge less than shops or hotels.

Tourists who want to get the best rate on travellers cheques must leave the comforts and the shade of their holiday resort and make the trek to the nearest town during banking hours.

From July 2003, charges for euro credit transfers up to €12,500 must be the same for national and cross-border transactions.

A report by the Consumers' Association says that the regulation will force some Irish banks to reduce their charges for cross-border credit transfers by around 95 per cent.