Beat booking fees on flights
Some airlines charge as much as £5 extra for booking by debit or credit card, but these fees can be avoided by paying by Visa Electron. The problem, however, is how to get hold of one of these cards.
Visa Electron cards have been around since the 1980s, and are aimed at younger people and those living in countries where all transactions need to be authorised. They are not hugely popular in the UK, where most bank accounts come with debit cards.
The chief difference between a Visa debit and Visa Electron card is that the latter requires funds be available in the account at the time of purchase. So, while debit cards allow transactions exceeding available funds (up to a certain point), there is no way you can go overdrawn when using an Electron card.
This is why Electron cards have traditionally been associated with young people and those with poor credit histories. However, over the past few years they have become increasingly popular with people keen to dodge sky-high booking fees on flights.
Ryanair, for example, charges a £5 booking fee per person each way on payments made via credit and debit card. However, the airline waives any fees on bookings made with Visa Electron cards. It says this is a “special offer” for a “limited period only”.
Easyjet, meanwhile, charges a £2.95 booking fee, and some cards (including Visa credit) are also liable for an additional fee of 2.5% of the total transaction. However, Visa Electron cards are exempt from these charges.
The problem for holidaymakers and frequent flyers who want to avoid these charges is that bank accounts offering Visa Electron are now few and far between. The Co-Operative, for example, has phased these out, while others only offer this type of card to their young customers.
Abbey’s youth bank account comes with a Visa Electron, but you must be aged between 16 and 18 to qualify.
The main option for people is Halifax, which continues to offer an Electron card with its Easycash basic bank account, which is available to people aged 16 and over.
However, the bank admits that this is not a current account – you won’t get an overdraft, chequebook or cheque guarantee card, and you won’t earn any interest on the money in your account. In additional, you won’t be able to pay money in via a Halifax branch, and withdrawals are limited to £300 plus.
On the plus side, your Visa Electron card can be used to make purchases and withdraw cash (minimum £300) from LINK machines. You can also set up standing orders and direct debits, have your salary or benefits paid into the account, and pay money using Halifax’s deposit machines in selected branches.
Because this account is unlikely to cover all your needs, it should probably be seen as an addition to your financial wardrobe. You could opt to keep enough money in the account to cover tickets for flights – bearing in mind that this won’t earn any interest - or pay this is as and when you plan to purchase tickets.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
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.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.