Don't rely on plastic to keep you afloat abroad
We were down to our last few Thai baht when I saw a cash machine. Without a second thought, I put in my card, punched in my pin and waited for the cash to come out. Except it didn’t. And neither did my card. My frantic button pushing produced nothing more than a message on the screen telling me to contact my card issuer.
To say I was stressed is an understatement. My husband and I were in the first week of a three-month trip around Thailand and Australia, and the last thing we needed was to be stranded without cash. As we have a joint account, we were reluctant to try my husband’s card in case it was also swallowed, so we headed for an international call shop and phoned our building society, Nationwide.
It said there was no problem with my card and had no idea why the bank machine had taken it. It suggested I visit the bank in question to see if I could get it back. This would have been a good idea, except I’d used an ATM that wasn’t linked to a branch, and I’d no idea where the card had gone. So Nationwide cancelled my card and arranged to send a new one to me in Australia. In the meantime, we used my husband’s card.
Since then, I’ve adopted a more cautious approach to taking cash out overseas. Now, I only use ATMs at branches, and only during opening hours. And I no longer wait until we’re down to our last few pounds before I use one.
With ATMs springing up in even the most remote locations, we’ve become accustomed to swanning off all over the world and relying on cards for money. For many of us, foreign currency and travellers cheques are too much hassle, so we simply pack our plastic. But this strategy can be problematic, not just when your card gets eaten by a rogue cash machine, as mine did, but also - and far more commonly - when your bank suspects fraud and puts a stop on your card.
This happened to web designer Sky Williams in Thailand in October. He had used his Lloyds TSB debit card a few times during his holiday, but then found it wouldn’t work when he tried to withdraw cash from a machine in Krabi.
"It was difficult to phone my bank. I had to borrow a phone and pay for an international call," he says. "I spent about 40 minutes on the phone, and when I finally got through, it said it'd stopped the card as a precaution because it had seen money coming out abroad."
Sky didn’t have any other cash or cards with him, but fortunately his account was unblocked straight away, enabling him to go back to the cashpoint. He says his cards have also been blocked on previous holidays to Spain and Morocco. "It is really annoying," he says. "But I can see that the bank is at least trying to protect my interests."
Sally Learmouth, a PR company director, says she and her husband have frequently had their HSBC cards stopped while abroad, most recently on a trip to Miami in January. "It’s irritating that they don’t seem to understand how serious it is to be stuck in another country without money," she says. "Now we tend to take lots of cards. We wouldn’t go abroad with just one account card."
While it can be a huge inconvenience to their customers, banks have good reason to be vigilant. According to APACS, the UK payments association, overseas fraud on UK cards increased by 77% in 2007. Losses totalled £207 million, and overseas fraud now accounts for 39% of fraud on UK cards.
APACS spokesperson Jemma Smith says that while the introduction of chip and pin has been successful in cutting domestic fraud transactions - in the past year alone, cash machine fraud in the UK dropped by 44% - it is driving an increase in overseas fraud.
"Fraudsters are now finding it much more difficult to use stolen or compromised details in the UK because of chip and pin, so they are increasingly going abroad to do so," she says. "If they can get hold of the magnetic stripe information and the pin, they can use it in a country that is not chip and pin compliant."
The US tops the overseas fraud table (£24.6 million) because the country has no plans to introduce chip and pin. Italy is next (£9.6 million), followed by Australia (£8.2 million), France (£7.3 million) and Spain (£5.7 million).
While it’s understandable that banks are cautious with overseas transactions, it’s still annoying if your card won’t work when you need it. So how can you guard against finding yourself abroad with no money? The most important precaution is to not rely on just one card when you travel.
Take a few, preferably from different banks, and keep them separate, just in case you are robbed or lose your wallet. While some banks will unblock your card immediately when you ask them, others won’t. Bear in mind that some bank fraud departments only operate during business hours.
It’s worth pointing out that when a retailer, restaurateur or other service supplier says your card isn’t working, it doesn’t always mean it has been blocked. Sometimes banks will refer the transaction and ask the supplier to call them so that they can verify the details with the customer.
However, often a company will be reluctant to phone the bank, because it is too expensive or time consuming, so it will simply tell the customer that their card isn’t working. If you’ve been unable to use your card to pay for something, try using a cash machine before calling your bank.
Take your bank’s international number with you, and make sure your bank has your mobile number. Nationwide, HSBC, Lloyds TSB, Abbey, First Direct and NatWest all say they will attempt to contact customers if they block their card, but Barclays and Halifax won’t always get in touch. Make sure you know all the security passwords on your account too.
Staying in touch
Some banks, including Halifax, HSBC, Abbey and Barclays, recommend that customers inform them of their travel plans and say this will decrease the chances of a card block. However Nationwide, NatWest, Lloyds TSB and First Direct say there’s little point in doing so as their systems are automated.
Even when your bank knows where you’re going, it could still block your account, as retiree Lynn Hyde discovered on a recent trip to visit her daughter in Australia.
"I phoned Barclays and said I was going to Australia for three months, and I gave it the dates when I’d be going and returning. It said it would flag it on my account," she says.
Lynn used the card twice, but the third time she went to a cash machine it didn’t work. She phoned Barclays and was told that it had stopped the card because of unusual transactions in Australia.
Informing your bank that you will be visiting a country doesn’t mean that you won’t be a victim of fraud in that country, and automated systems will still block accounts if an activity looks suspicious.
"It wasn’t too much of a problem and I was able to use the card again once I’d gone through all the security questions with Barclays," she says. "The strange thing is that my husband, who is with Lloyds TSB, never bothered to phone his bank and we had no trouble accessing his account."
There do seem to be inconsistencies in the way banks spot suspicious transactions, and banks are reluctant to help fraudsters by revealing their detection systems. However, they’ll generally be suspicious of unusual spending patterns and inconsistent transactions, such as a card being used in two places at once. Making lots of large cash withdrawals over a short period is also likely to set off alarm bells.
Customers are more likely to face blocks in countries where there is a high incidence of fraud, or where chip and pin has yet to be implemented. Countries in the Far East, Africa, Eastern Europe and South America are listed by some banks as problematic.
If you are going off the beaten track, it might be worth considering more traditional methods of payment, says Association of British Travel Agents spokesperson Frances Tuke.
Tuke says: "If you are planning to visit long-haul destinations, and developing countries in particular, it is worth carrying a supply of money, and although it is unfashionable, it may also be worth taking travellers cheques."
Pre-paid cards provide another option. These can be used in the same way as a credit or debit card, but users can only spend what has been loaded onto the card. While they do come with set-up, withdrawal and cancellation charges, these cards are far less likely to be blocked while you’re abroad, but if your card is used by fraudsters, you’re also less likely to get your money back.
Having your card blocked is a hassle, but with fraud on the rise, it’s one we’ll probably have to live with when we travel. Plastic is fantastic, but it’s not foolproof. So if you don’t want to be caught out, be prepared.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.