Non-Sterling Transaction Fees: Avoid Hidden Costs Abroad

TL;DR: When using a UK card for purchases or cash withdrawals in a foreign currency, you might face non-sterling transaction fees. These can be around 2.75% to 2.99% of the amount you spend or withdraw. To avoid these foreign transaction fees, always choose to pay in the local currency, check your card’s terms before you travel, and try to limit cash withdrawals abroad.

Imagine you’re on holiday, enjoying a nice meal, and you pay with your UK bank card. You think you’ve paid the right price. But when you check your bank statement later, you see an extra charge called a “non-sterling transaction fee.” This can be a nasty surprise, making your overseas spending cost more than you expected. This guide will help you understand these fees and show you how to avoid them.

What Are Non-Sterling Transaction Fees?

A non-sterling transaction fee is an extra charge that some UK banks and card companies add when you make a payment or take out cash in a currency other than British pounds sterling (GBP). This fee applies even if you’re shopping online from the UK but the website charges you in another currency, like euros or US dollars.

For example, if you use your UK debit card to pay for a meal in Spain, the restaurant will charge you in euros. Your bank then changes this euro amount into pounds. At this point, your card provider might add a non-sterling transaction fee to your bill. Similarly, if you buy something from a foreign website and choose to pay in US dollars, your bank might see this as a foreign currency payment and add the fee, even if you are at home in the UK.

How Much Do Non-Sterling Transaction Fees Cost?

There isn’t one fixed non-sterling transaction fee across the UK. Each bank sets its own charges. Also, different types of accounts or cards from the same bank can have different rules and fees for overseas spending.

Here are some examples of what banks might charge, but remember to always check your own bank’s specific terms:

Provider/Card Example	Purchases in Foreign Currency	Cash Withdrawals in Foreign Currency	What to Note
HSBC debit cards (outside UK)	2.75% non-sterling fee	2.75% non-sterling fee PLUS 2% cash fee (min £1.75, max £5.00)	HSBC notes different rules for some Premier or Private Banking customers.
NatWest standard card	2.75% non-sterling fee	Many cash withdrawals also have a 2.75% non-sterling fee	Some NatWest products, like certain travel accounts, might offer 0% fees for card purchases. Always check your specific product details.
Santander debit card	2.95% foreign currency fee	2.95% on withdrawals (some ATM exceptions)	Santander also has some credit cards with 0% non-sterling transaction fees, while others charge 2.95%.
Lloyds debit and credit cards	Depends on account and extra services	Depends on account and extra services	Lloyds states some accounts allow fee-free debit card use abroad. Customers with Classic and Basic accounts might need to add a “Travel Smart” option.

Note: These examples give you an idea of common charges. They are not a full comparison of every bank’s fees. It’s vital to always look at your own bank’s fee information document to know the exact costs for your card. These details were checked and were correct as of July 7, 2026.

Why Can Foreign Card Spending Cost More Than Expected?

When you spend money with your card in another country, or online in a foreign currency, there are usually three main costs you need to be aware of. These can make your spending more expensive than you first thought.

1. Your Card Issuer’s Non-Sterling Fee

This is the main fee your bank or card company adds for handling a transaction that is not in pounds. It’s usually a percentage of the amount you spend. For example, if you spend £100, and the fee is 2.75%, you’ll pay an extra £2.75. This is the non-sterling transaction fee we’ve been discussing.

2. Cash Withdrawal Fees

Taking cash out from an ATM abroad can cost more than using your card to buy things. Your UK bank might charge both a non-sterling transaction fee and an additional cash fee for foreign withdrawals. On top of that, the ATM owner in the foreign country might also charge their own fee. This happens even if your own bank doesn’t charge you for the withdrawal.

3. The Exchange Rate Used

Every time you spend in a foreign currency, that money has to be changed into pounds. The rate used for this conversion matters a lot.

• Card network rates: Card companies like Visa and Mastercard have their own exchange rate calculators. These can give you an idea of the rate you might get. However, your bank can still add its own fees on top of these rates.
• Bank markups: Some banks might say they don’t charge a separate non-sterling transaction fee, but they might hide an extra cost within their exchange rate. This is called an “exchange rate markup.” It means they don’t give you the true market rate, so you get less foreign currency for your pounds.
• Mid-market rate: The mid-market exchange rate is the fairest rate. It’s the midpoint between the buying and selling prices of a currency. Banks often add their own fees and profit margin to this rate.

The final cost of your purchase can also change if the shop, restaurant, or ATM offers to convert the price into pounds sterling right when you pay. This is known as dynamic currency conversion.

What Is Dynamic Currency Conversion (DCC)?

Dynamic currency conversion (DCC) happens when a shop, hotel, website, or ATM asks if you want to pay in British pounds (GBP) instead of the local currency (for example, euros in Spain). This might seem helpful because you see the price in pounds straight away.

However, with DCC, the exchange rate is set by the local merchant, the ATM operator, or their payment provider. This rate is often worse than the one your own bank or card network would use. When you choose to pay in pounds abroad using DCC, you usually end up paying more because of this less favorable exchange rate or extra conversion costs.

The simple rule to remember when you are traveling is this: Always choose to pay in the local currency unless you have a very specific reason not to. This helps you avoid the overseas provider’s extra currency conversion fees and typically gets you a better exchange rate from your own card provider.

How to Avoid or Reduce Non-Sterling Transaction Fees

It’s possible to significantly cut down or even completely avoid foreign transaction fees when you’re spending money abroad or online. Here are six clear steps you can take:

1. Check Your Card Before You Travel

Before you leave for your trip, take some time to look at the terms and conditions for your bank card. You can usually find this information in your banking app or in a document about account fees.

Here’s what to look for:

• Non-sterling transaction fee: This is the percentage charged for foreign payments.
• Foreign currency conversion fee: This might be another name for the same type of fee.
• Cash withdrawal fee: This is an extra charge for taking out cash abroad.
• ATM fee: Some banks charge a specific fee for using ATMs outside the UK.
• Credit card cash advance fee: If you’re using a credit card for cash, this is a special fee.
• Interest on cash withdrawals: Credit cards often charge interest immediately on cash withdrawals.
• Fee-free account or travel add-on options: Your bank might offer accounts or services designed for travel that remove these fees.

It’s important to do this well before your travel date, as changing cards or ordering a new travel-friendly card can take time. This step is key to avoiding unnecessary overseas spending costs.

2. Use a Card Designed for Overseas Spending

Many bank accounts, prepaid travel cards, credit cards, and multi-currency cards are specifically made for people who travel and spend money internationally. These special cards can help you avoid common charges.

They might remove the separate non-sterling transaction fee, offer a clearer exchange rate, or allow you to hold different currencies in advance. Researching these options can help you find a good solution for your travel money needs. Many guides are available to help you compare these options, such as those looking at the best UK debit cards for travel.

3. Pay in the Local Currency

This is one of the most important tips. When you’re using a card machine abroad and it asks if you want to pay in pounds sterling (GBP) or the local currency, always choose the local currency.

By choosing the local currency, you let your own card provider or card network handle the currency conversion. This usually gives you a better exchange rate. If you choose to pay in pounds, you’re likely to trigger dynamic currency conversion (DCC), where the overseas shop or ATM operator sets the exchange rate, which is often less favorable.

4. Avoid Unnecessary Cash Withdrawals

Cash withdrawals abroad can lead to extra fees. As mentioned earlier, your bank might charge a non-sterling transaction fee, a cash fee, and the local ATM operator might add their own charge too.

If you absolutely need cash, try to take out fewer, larger amounts instead of many small ones. However, only do this if it feels safe and practical in your location. Check if your card has a monthly limit for free withdrawals. For example, some cards allow you to take out a certain amount, like £250, each month without fees. Going over this limit might mean you pay a fee, such as 2.69% on the amount above the allowance. Remember that independent ATM networks might still charge their own fees, even if your card provider doesn’t. When planning your trip, consider guides like how to handle cash vs card in Italy or Singapore.

5. Watch Online Purchases

Non-sterling transaction fees aren’t just for travel. They can also apply when you buy something online from an overseas website that charges in a foreign currency.

Sometimes, using a Virtual Private Network (VPN) or if your computer’s settings are set to the wrong country, a website might show you prices in a different currency. Always be aware of the currency displayed when you are checking out. If the online store gives you a choice of currencies, compare the price in GBP with the price in the local currency, considering your card’s likely fees. Sometimes, paying in GBP online might seem convenient, but the retailer may have already built their own less favorable exchange rate into that price, leading to hidden online non-sterling fees.

6. Be Careful with Credit Card Cash Withdrawals

Credit cards can be helpful when you’re abroad, especially for things like purchase protection on larger buys. However, using a credit card to take out cash can be very expensive.

You might face several charges: a specific cash fee, interest that starts adding up from the day you withdraw the money, and a non-sterling transaction fee if the withdrawal is in a foreign currency. Unless you fully understand all the costs involved, it’s generally better to use a debit card or a specialist travel card for cash withdrawals. Understanding the differences between a debit card vs credit card abroad can save you money.

Debit Card vs Credit Card: Which Is Better Abroad?

Deciding whether to use a debit card or a credit card when you’re abroad depends on what you need and what fees your specific cards charge.

• Debit Cards: These are usually simpler for getting cash and for everyday spending because you are using your own money directly from your bank account. However, many standard debit cards do charge foreign transaction fees.
• Credit Cards: Credit cards can offer extra protection for your purchases, which can be useful for larger items. They are also often preferred for things like hotel deposits or renting a car. The downside is that credit card cash withdrawals can come with high fees and immediate interest charges. Some special travel credit cards offer 0% non-sterling purchase fees, while others might charge close to 3%.

The best card for you is one where you clearly know all the following details:

• The non-sterling fee
• Any cash withdrawal fee
• The actual exchange rate your bank uses
• Whether interest applies (especially for cash withdrawals)
• If the card is widely accepted in the places you plan to visit (e.g., Hong Kong payments).

Example: How a 2.75% Fee Adds Up

Let’s imagine you spend the equivalent of £800 on your holiday. This money covers hotels, meals, taxis, and shopping. Here’s how different fee rates can quickly add up:

Fee Rate	Extra Cost on £800 Spending
0%	£0
2.75%	£22
2.95%	£23.60
2.99%	£23.92

This example doesn’t even include potential extra charges from ATM operators, cash fees from credit cards, or the hidden exchange rate markups from dynamic currency conversion. As you can see, even a few percentage points, which might seem small at first, can make a noticeable difference to your total spending budget over a trip.

Can You Get a Refund on Non-Sterling Transaction Fees?

Generally, you cannot get a refund on non-sterling transaction fees if your bank or card provider charged them correctly according to your card’s terms and conditions. These fees are part of the agreement you have with your bank for using your card abroad.

However, there are specific situations where you might be able to question a fee:

• You believe the transaction was actually charged in British pounds, not a foreign currency.
• The fee your card provider charged does not match the terms you have for your account.
• A shop or ATM used dynamic currency conversion without making it clear that you were choosing to pay in pounds instead of the local currency.
• The transaction itself was incorrect or fraudulent (e.g., someone used your card without your permission).

If you think a fee is wrong, start by carefully checking your bank statement, the receipt for the transaction, and your card’s fee document. If something doesn’t look right or doesn’t match, then you should contact your card provider to discuss it.

FAQs About Foreign Transaction Fees

Is a non-sterling transaction fee the same as an exchange rate markup?

No, they are different but can both apply. A non-sterling transaction fee is a specific percentage fee that your card issuer adds to your transaction. An exchange rate markup is a hidden cost built into the exchange rate itself; it means your bank gives you a less favorable rate than the true market rate. You can sometimes end up paying both types of charges on the same transaction.

Do non-sterling transaction fees apply online?

Yes, they can. If you buy something from a website that is based overseas and it charges your UK card in a foreign currency (like euros or US dollars), your bank or card provider may add a non-sterling transaction fee. This is part of the online non-sterling fees you should be aware of.

Should I pay in pounds or local currency abroad?

You should always choose to pay in the local currency when you are abroad. If you choose to pay in pounds, it often triggers dynamic currency conversion (DCC). With DCC, the overseas shop, restaurant, or ATM provider gets to choose the exchange rate, which is usually worse for you and can lead to higher costs.

Do ATMs abroad charge extra fees?

Yes, they can charge extra fees. Your UK card provider might add a foreign currency fee or a specific cash fee for withdrawing money abroad. On top of that, the operator of the ATM itself in the foreign country might also charge its own fee for you to use their machine.

How do I know what my card will charge?

To find out what your card will charge, you need to check your bank’s fee information document or use their mobile banking app. Look specifically for details on non-sterling transaction fees, cash withdrawal fees, ATM fees, and any special travel benefits your account might offer. For instance, HSBC’s support pages or Lloyds Bank’s travel guides provide this information.

Related reading

• Keep your UK number abroad
• Using Credit Cards Abroad: Fees, Tips & How to Save Money
• Mastercard Exchange Rate: Your Guide to Avoiding Hidden Fees