In these tough economic times, with both banks and building societies being wary to lend money and customers being nervous of making big cash investments the spectre of additional fees looms large for many people. 

A trend across much of the credit card market is to charge an additional fee for any purchase made outside the country or for withdrawing cash on a credit card.  The lone building society that had avoided this practice was Nationwide; that is until now.

Because VISA charge the card issuer a small fee when cards are used outside the European Union many card companies passed on this fee to the consumer.  In previous times, Nationwide was willing to pay the fee themselves in order to heighten the attractiveness of their cards but now given all the economic uncertainty they feel that this course is no longer sustainable.

"As a prudent organisation, we have to maintain the balance between offering competitive products while ensuring they are sustainable in the long term, particularly in the current economic climate.  Our cards remain commission-free when used anywhere in the world and customers using their cards in Europe will not receive any charges, as the Visa fee does not apply here," explained a spokesman for the company.

Consumer groups hit back

The move by Nationwide stirred a strong reaction from various groups, particularly consumer watchdog Which? Who accused the bank of “selling out” by levying the fee.  The consumer group noted that the only company left offering the service without a fee was the Post Office and that consumers had lost a vital service within the card industry.

“Nationwide's decision to start charging customers fees for most purchases outside Europe is incredibly disappointing. Nationwide had been a shining light to the credit card industry with its no-fee policy on overseas purchases – it's a shame they've now sold out and fallen into line with the rest of the market,” said Martyn Saville from Which?

Nationwide’s website explained that the new fee arrangements would come into effect on the 6th of May, when the charge will be 0.84% of the purchase price; this will then increase to a full 1% on the 1st of June.

Changing times

After their merger with the Portman Building Society back in 2007, Nationwide has become the largest building society group in the world with nearly 700 branches and estimated assets of over £150 billion.Even for a giant in the field though, times are tough.  Across the board banks and building societies are becoming more cautious about whom they will lend to and many have come under sharp criticism for their reluctance to pass on interest rate cuts to their customers.

After taking over the Cheshire and Derbyshire building societies many thought Nationwide could well struggle for equity but according to new reports they have apparently decided that they will not need to seek money from the government.

“As a result of reassessing Nationwide’s capital requirements, we have agreed with the tripartite authorities that it is not necessary for Nationwide to raise additional capital.  In common with all financial institutions, Nationwide will continue to work with the FSA to review its capital requirements on a regular basis.” Said a spokesman for the lender.