Planning a
trip overseas? Are you traveling to a place where the American dollar has no or
little value? Exchange your currency prior to your trip in your local bank
thereby avoiding unnecessary frustration. Doing so will allow you to make one
transaction as oppose to foreign bankers which can charge you lots of percent
on your monies. If you decide to be charged in the local currency, your credit
card issuer may charge you a foreign-transaction fee to convert the purchase
into dollars. The average credit card charges 3% of the transaction (1 percent
conversion fees imposed by the international MasterCard and Visa networks plus
their own 2 percent fee), where as the international bankers charge you
way more than that. A recent study shows that credit
card firms save the average international traveler over 14% of fees on currency
exchange.
Airport bankers such as Travelers and international bankers charge you between 8% and 14% per transaction.
The study also shows that 90% credit card firms charge a minimum
of only 3% (some between 5% and 6 %) whereas others don’t charge you at all.(using a credit
card that doesn't have a foreign transaction fee is usually cheaper than using
the currency conversion services at retail stores, banks, and airports, which
tend to charge high fees and could be unreliable in their currency
calculations. Networks like Visa and MasterCard usually use the wholesale
market rate or the government-mandated rate.) It's therefore important
to review all your credit cards and see which one has the best offerings and to
use that specific card throughout your trip. (Not to mention you should also
have some cash on hand for those that do not accept credit cards.)
It's important to mention that not every credit card charges a
foreign-transaction fee, For example Capital One and Discover don't charge any
foreign-transaction fees on any of their cards (However according to the N.Y. Times research Discover’s
acceptance internationally has traditionally been limited). Other issuers
like Chase have removed these fees on many of its cards marketed to
travelers such as their British Airways and Sapphire Preferred cards. Amex,
Citi, waive the fee on certain credit cards.
So which way is the better choice? It'll probably boil down to the type of credit cards you have in your wallet. If you own a card that waives a foreign transaction fee, then the choice is clear. Ask to be charged in the local currency to avoid the currency-conversion fee.
So which way is the better choice? It'll probably boil down to the type of credit cards you have in your wallet. If you own a card that waives a foreign transaction fee, then the choice is clear. Ask to be charged in the local currency to avoid the currency-conversion fee.
However, if your credit card charges a foreign-transaction fee,
the choice is not so obvious.You will want to pay in the currency that offers
the cheaper fee.
Foreign-transaction fees are usually between 2 percent and 3
percent of the sale. That makes them generally cheaper than the 3 percent to 7
percent currency-conversion fees. Be careful since there are so many variations
so be sure to check your card's foreign transaction fees ahead of time.
Once you know that fee, you can compare it with the retailer's
conversion fee. All major payment networks have different regulations regarding
currency-conversion fees.
Visa requires its merchants to reveal their exchange rate and
any currency-conversion fees or commissions.
American Express bans retailers from charging a conversion
fee.Turns out that it's cheaper to constantly pay in your home
currency when you use an AmEx card that charges a foreign-transaction fee.
Below is a list of some credit cards that don't charge foreign transaction fees:
Chase
Chase British Airways Visa
Chase Sapphire Preferred Card
Chase Fairmont Visa
Southwest Rapid Rewards card
Hilton reserve card
Hyatt Card from Chase
Chase Ink Bold
J.P. Morgan Select Card from Chase
Marriott Rewards Premier from Chase
Priority Club Select Visa from Chase
Ritz-Carlton Rewards card from Chase
American Express
American Express Platinum Card
Centurium card
FNBO Graphite American Express
Citi Bank
Citi ThankYou Premier Card
Citi Executive/AAdvantage WorldElite MasterCard
Citi ThankYou Prestige
Citi ThankYou Prestige
Capitol one
All cards
Discover
Discover Travel Card
Discover Open Road
Escape by Discover
Miles by Discover
Discover More
Discover Motiva
Discover Student More
Discover Student Open Road
Discover Open Road
Escape by Discover
Miles by Discover
Discover More
Discover Motiva
Discover Student More
Discover Student Open Road
Bank of America
BankAmericard Travel Rewards
WorldPoints Travel Rewards for Business Visa
Tips to protect your finance before you travel:
1. Record a list of your card
numbers, and their overseas emergency telephone numbers,keep this separately
apart from your cards. This way if you lose your wallet or have any issues, you
will be able to contact your bank and credit card companies immediately.
2. Notify your credit
card issuer about your trip, to prevent them from blocking a charge overseas
for security purposes, the same applies when you travel domestically even
though it's only a couple of hundred miles away from your registered address.
3. One last way to protect yourself is to make sure to hold onto
all of your receipts. You can dispute currency-conversion fees if the retailer
charges one that you didn't approve.
4. Never use your credit card to withdraw cash. Foreign
transaction fees are tedious, but nothing in comparison to the costs of cash
withdrawals. These transactions usually incur a cash advance fee. In addition a
higher interest rate is applied immediately with no grace period. Even more so,
even cash advances are often subject to the same foreign transaction fees as
purchases!