Nov 7 2016

Tesco reduces credit card charges #loans #without #credit #check

#tesco credit card

Tesco reduces credit card charges

Tesco has bowed to pressure and reduced the charges paid by its credit card holders after a Guardian investigation found millions of customers were being hit with unexpected costs when using their plastic abroad.

Unbeknown to many of its cardholders, Tesco had quietly started using its own exchange rates to convert overseas purchases into sterling, which were much worse than standard Visa and Mastercard rates used by rival cards. A Guardian article published in December said the change, hidden in the small print, could be raking in around 12m a year for the supermarket group .

But Tesco has now backed down and announced that, in response to customer feedback and to improve transparency , it would be bringing its exchange rates into line with the rest of the industry.

There are 2.7m Tesco credit cards in circulation, giving it a near 5% share of the UK market, and the financial services division is one of the retailer’s most lucrative businesses.

Cardholder Mark Phelan alerted the Guardian to the little-noticed change after a booze cruise to France last June, paid for with his Tesco card, ended up costing him more than he expected. He turned detective and found that, even though its cards display the Mastercard logo, Tesco had introduced its own exchange rates. They were set by Royal Bank of Scotland. which along with its NatWest division, made a similar change to the terms of its own cards in early 2008.

Our research showed that in many cases the supermarket group was imposing an extra mark-up of around 2% or more on top of the published 2.75% foreign exchange fee. Based on a €200 ( 167 at the time) purchase, this translated into an extra 4 over and above what someone would pay if they used a rival card. For a cardholder spending 1,000 while on holiday it would add up to an extra 20- 30 on top of the commission Tesco receives from the fee.

Phelan, who lives in Wokingham, Berkshire, said at the time that cardholders are at the mercy of Tesco and RBS, who have a direct monetary benefit by fixing the exchange rate in their favour . He told the Guardian today: I’m really pleased [Tesco] has bowed to public pressure. The power of the press has come through. He added that RBS, by contrast, have refused to do anything .

In a statement, Tesco said its Clubcard credit card has always offered great value to our customers when shopping in the UK and when travelling overseas , adding: In response to customer feedback and to improve transparency, we are now pledging to align our foreign exchange rate with the central industry rates. Implementation of the change is underway, and the rate alignment will be in place for all cardholders in February.

The new change applies to all the company’s cards, both Visa and Mastercard, including those no longer available to new customers such as the Tesco Finest and Tesco Bonus cards.

RBS/NatWest said it had no current plans to stop setting its own exchange rates.

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