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From Editor: This is a guest article by Noreen Ruth
Planning a trip to Europe or another foreign country? Along with getting your identification, medical and personal papers in order, be sure to check with your banking institution and credit card issuers for the exchange rates you will pay to use their services abroad.
Many banks charge a fee for converting purchases made in a foreign currency into U.S. dollars, known as a foreign transaction fee (previously called a currency conversion fee). The amount varies from bank to bank and card to card, as well as when the fee is added. A foreign fee is charged for purchases made on foreign soil and also for any purchase that, at any point, is processed through a foreign bank. This means that you can place an online order from your home in the U.S. for a Givenchy fashion piece and be charged a fee, if the French designer uses a French bank to process the transaction.
Here’s what you need to look for:
– Credit unions are less inclined to tack on a foreign transaction fee with an estimated 60% imposing the charge, while 90% of banks charge a fee.
– Upscale travel- cards are more likely to forgo any charge for foreign transactions.
– Look for the conversion rate, 3% of the purchase amount. For example, on a $2,000 purchase made in a foreign country, a fee of $60 is charged for the privilege of using the card outside the United States.
– Look for a card with no annual fee; fees can range from $49 to $395 and be costly, if you will be paying a foreign exchange fee.
– Discover Card is not as widely accepted in foreign countries as Visa and MasterCard.
– Debit cards may not exempt from foreign currency fees. Some banks charge for withdrawing funds at ATMs or for making direct purchases.
If you plan your trip far enough in advance, you’ll have time to apply either of the following offers that carry no international fees – Capital One Venture Rewards or the Chase Sapphire Preferred. Both cards award bonuses on every purchase and include offer multiple ways to redeem them. The downside, however, is that both carry an annual fee of $59 and $95, respectively, but the bonuses can easily offset the fee, if the card is used extensively.
The terms for foreign currency rates may not be readily available in the terms and conditions or on the card’s website. But reading and understanding what you will pay before venturing out on a European or other foreign vacation will help you save money. So take the time to call the issuer and have a copy of the terms sent or emailed.
About the Author: Noreen Ruth writes for several popular finance websites. She is interested in educating consumers about using credit responsibly and about legislative action that will affect their ability to borrow the money they need. She has contributed hundreds of articles to various online sites that provide content to educate consumers on credit card offers, debt consolidation, loans and other finance related topics.
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