The cost of using credit overseas
Posted on October 18, 2007
Filed Under Advice | 1 Comment
Before you leave home for exotic locales, call your credit card company and find out what it charges for overseas transactions. Don’t reach for your wallet until you know how much your lender charges to use its card.
For example, American Express doesn’t charge a foreign transaction fee, but it does carry a 2% currency conversion fee. Capital One picks up the tab for both, as does Discover (though the card is not as widely accepted overseas as Visa and MasterCard).
The folks at indexcreditcards.com recently surveyed major card companies and came up with this list — from lowest to highest — of foreign transaction fees for issuers.
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Capital One: 0% transaction fee. (Capital One does not impose a fee, and it also eats the 1% fee that Visa or MasterCard impose.)
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Discover: 0% transaction fee. (Note, however, that Discover is accepted on a limited basis outside of North America.)
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Washington Mutual (NYSE: WM): 1% transaction fee.
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American Express: 2%.
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Pulaski Bank: 2%.
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Barclays/Juniper Bank: 2% to 3%, depending on card.
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Bank of America (NYSE: BAC): 3%.
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GE (NYSE: GE) Money: 3%.
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Wells Fargo (NYSE: WFC): 3%.
The upside and downside of debit cards
A prepaid debit card can help you avoid some of these fees, but relying solely on this mode may leave you in a pinch, as not all vendors are set up to accept them.
No matter where your travels take you, if you are using an ATM, you can limit the number of times you pay the out-of-network fee by withdrawing a lot of cash at once — though carrying a wad of cash puts you at risk for theft. If you carry American dollars or traveler’s checks overseas, you might not get as good an exchange rate as you do via your credit card.
Don’t get stuck doing dishes to pay for dinner
The best strategy is to have a few payment options at your disposal at all times. If you find a bank that offers a great exchange rate and low fees on traveler’s checks, consider using them to pay for big purchases (such as your hotel bill). On smaller day-to-day purchases, withdraw a few days’ worth of funds at once to cover costs and put the extra money in your hotel safe.
Alert your bank and credit card company before you travel — domestically or overseas. Banks and credit card companies are on high alert for fraud, and sometimes they have a hair-trigger reaction to unusual account activity. After an initial withdrawal at an ATM at the Paris airport, my bank cut me off because I didn’t let them know that I was taking a well-deserved break overseas. Thankfully, a quick phone call remedied my Parisian payment problem.
And just to be safe, if you’re separated from your bags or lose your purse or wallet, keep copies of everything in your wallet — insurance cards, driver’s license, credit/bank cards, passport, and contact information — on you and in your luggage so you don’t have to bus tables to pay for your crepes.
Washington Mutual, US Bancorp, JP Morgan Chase, and Bank of America are all Income Investor recommendations. MasterCard is an Inside Value pick.
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One Response to “The cost of using credit overseas”
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