New best overseas debit card launches in January

Anyone with the mutual's Gold Current Account will see their bank account automatically converted to either a Gold Classic Account or Gold Light Account, depending on how they've used it in the past, from 1 January.

But for both account types, all charges for spending and withdrawing cash using its Visa Debit card while abroad will be abolished.

Currently N&P customers pay a load fee of 2.75% on each overseas transaction (that is, spending £100 costs £102.75), while cash withdrawals attract a £2 fee on top of this, and purchases cost an extra £1.25.

Both new accounts potentially charge users £5/month, yet these can be avoided, but you have to know how.

In the current market, N&P will be offering the new cheapest debit card for overseas spending (see the Cheap Travel Money guide for all overseas spending best buys).

New customers can apply for either a Gold Classic Account or Gold Light Account online, in branch or over the telephone (0845 300 2511) from 1 January.

Alternatively if travelling abroad on or close to that date, you can get the Gold Current Account before then and it will convert immediately in time for trips.

All new applications will go through a credit check, though the Gold Classic Account will ge harder to get accepted for than the Gold Light Account (see the Credit Rating guide).

How to avoid £5/month fees

Fees are charged for different things on the two accounts:

• On both accounts: There is a flat £5 monthly fee if you go into your overdraft facility, however little or much this is by. To avoid this charge simply do not use your overdraft.

• Gold Classic: You will be charged the fee if you don't pay £500/month into the account. This is equivalent to having a salary or annual pension of £6,100 or more paid into it.

  If you earn less than this, either opt for the Gold Light Account instead or move some money out to an external account and transfer back in again each month, so that you have credited at least £500.

• Gold Light: Here the £5 fee is levied if you make less than five transactions per month, unless the average balance over the month is £5,000 or more. Transactions are defined as card payments, standing orders, direct debits, cash deposits or withdrawals.

  If you think there is any danger of you not reaching this level, simply set up five small (1p even) standing orders to other accounts so that you always meet the threshold.

Dan Plant, credit card analyst at MoneySavingExpert.com, says:"Provided you beat the fees, this is a big boost for travellers looking for a card to use abroad.

"One slight issue is that to avoid the fees you must be an active account user, either making transactions or decent-sized pay-ins, so this isn't right for someone who wants a card to spend on once a year, then tuck away until next summer."

Which account will existing customer get?

From 1 January...

• If you normally pay in £500/month, you will automatically get a Gold Classic account.

  If you'd rather have a Gold Light, provided you do not have an outstanding overdraft, you can request to be switched.

• If you don't regularly pay in £500/mth, you'll automatically be given a Gold Light Account.

  If you'd prefer a Gold Classic Account, you can apply for the change but it's subject to a credit score and "satisfactory account conduct for the previous six months". Even then, no overdraft facility will be granted until three months' consecutive credits of £500 or more have been made.

Be sure to note which one yours is, and the rules on how to beat the charges above.

The minimum funding amount and minimium transaction count is per account rather than per person, so a joint account has the same requirements as a sole account.

The account name is the only thing that will change and existing account numbers, sort codes, debit cards and overdraft limits will stay the same.

Only existing customers automatically transferring to a Gold Light Account will have an overdraft facility, provided they previously had one with the Gold Current Account. Overdrafts won't be available to applicants applying directly for the Gold Light Account.

Nationwide-beater

The N&P announcement comes just as fellow building society Nationwide changes the terms and conditions of its Flexaccount debit card.

For years Nationwide allowed fee-free spending worldwide. Then in 2009 it started to charge a 1% transaction fee for all spending outside of Europe.

As of yesterday it started charging 2% for all foreign transactions, plus each cash withdrawal now incurs an additional £1 charge (see the Nationwide kills cheap overseas spending for current account customers MSE News Story).

At the time Nationwide published details of its account changes, Martin Lewis, MoneySavingExpert.com creator, said:

"This is a guillotine through the neck of Nationwide's reputation as a cheap account for overseas spending. Credit card loading is a nasty hidden fee Nationwide has bitched about other banks levying, yet from November, it's doing it too.

"It's not an error by Nationwide, the building society is actually trying to kick nearly a million customers out of the door.

"That's because out of its 3 million+ account holders, 1.4 million use the debit card overseas and 900,000 of those use the account ONLY for that and nothing else – and that costs. So Nationwide wants them gone to ensure it's focusing on people using their account 'properly', as it sees it."

Further reading/Key links

Get cheap currency: TravelMoneyMax.com, Cheap Travel MoneyWatch Nationwide's 'No overseas charges' advertisement