Credit card use while traveling

Another thread (see "Mastercard ATM problems: Warning" thread)
reminded me about something that many people may not be aware of:
Most credit cards add a surcharge for international transactions.
First they change your transaction into dollars (or whatever your home
currency is). Then VISA or Mastercard adds a 1% fee to the
transaction. Then your credit card company (i.e. the issuing bank)
adds another 2% (usually).

There isn't anything you can do about the 1% that VISA or Mastercard
add on. But the 2% is something that is relatively new (last couple
of years) and not all banks do it. I use a Capital One card for
overseas travel specifically to avoid this charge. Capital One
doesn't add the additional fee (so far).

AmEx also adds on a few percent.

I suggest calling your credit card (the customer service number on the
card or on your statement) and asking what they charge for
international transactions. If the customer service person sounds
unsure, ask to speak to a supervisor. If your card charges the 2%,
and you expect to spend a few thousand dollars internationally, it may
be worth getting a different card. Note that these charges apply to
any foreign currency transaction, such as mail order from other
countries, or visits into Canada.

DanK

On 16 May 2004 09:15:41 -0700, (Dan K) wrote:

Another thread (see "Mastercard ATM problems: Warning" thread)
reminded me about something that many people may not be aware of:
Most credit cards add a surcharge for international transactions.
First they change your transaction into dollars (or whatever your home
currency is). Then VISA or Mastercard adds a 1% fee to the
transaction. Then your credit card company (i.e. the issuing bank)
adds another 2% (usually).

The surcharge on the conversion rate applied by Visa and MasterCard is
much less than 1% - probably more like 0.1% or 0.2% at most. I have a
credit card that doesn't charge any conversion fee, and the overall
exchange rate I get seems to be within 0.2% of the interbank exchange
rate.

Chris

"Dan K" wrote in message
om...
I suggest calling your credit card (the customer service number on the
card or on your statement) and asking what they charge for
international transactions. If the customer service person sounds
unsure, ask to speak to a supervisor. If your card charges the 2%,
and you expect to spend a few thousand dollars internationally, it may
be worth getting a different card. Note that these charges apply to
any foreign currency transaction, such as mail order from other
countries, or visits into Canada.


Dan,
I'm not sure that "most" banks add this fee, but some of the larger ones do,
and there is no justification for doing it, aside from greed. Since learning
about this practice, I think I'm about to dump my "backup" credit card. No
sense in paying the extra fee when you don't have to.

Also, watch out for merchants charging you in dollars while overseas. When
they do the conversion, it is not to your advantage.

However, unless you plan to spend $ million or so, the %1 credit card & ATM
exchange fee is the best deal going.

--
Donald R. Newcomb
DRNewcomb (at) attglobal (dot) net

And do you have any suggestions for transferring funds for less overall
cost?

Dan K wrote:

Another thread (see "Mastercard ATM problems: Warning" thread)
reminded me about something that many people may not be aware of:
Most credit cards add a surcharge for international transactions.
First they change your transaction into dollars (or whatever your home
currency is). Then VISA or Mastercard adds a 1% fee to the
transaction. Then your credit card company (i.e. the issuing bank)
adds another 2% (usually).

There isn't anything you can do about the 1% that VISA or Mastercard
add on. But the 2% is something that is relatively new (last couple
of years) and not all banks do it. I use a Capital One card for
overseas travel specifically to avoid this charge. Capital One
doesn't add the additional fee (so far).

AmEx also adds on a few percent.

I suggest calling your credit card (the customer service number on the
card or on your statement) and asking what they charge for
international transactions. If the customer service person sounds
unsure, ask to speak to a supervisor. If your card charges the 2%,
and you expect to spend a few thousand dollars internationally, it may
be worth getting a different card. Note that these charges apply to
any foreign currency transaction, such as mail order from other
countries, or visits into Canada.

DanK

Yeah!! Spot on, Donald.

The deal they offer may include small, not well known charges - but it's
still better to use ATM's than any other source of foreign cash.

The Visa Electron Card, which Visa is promoting heavily charges bigger fees;
and since it is 'front loaded' with your cash, has the additional 'benefits'
of depriving you of interest and giving Visa an interest free loan of YOUR
money, which they then charge you to access!!!!! All with the complicit
approval of your 'friendly neighbourhood bank' - who also get a little out
of it all!!!




"Donald Newcomb" wrote in message
...

"Dan K" wrote in message
om...
I suggest calling your credit card (the customer service number on the
card or on your statement) and asking what they charge for
international transactions. If the customer service person sounds
unsure, ask to speak to a supervisor. If your card charges the 2%,
and you expect to spend a few thousand dollars internationally, it may
be worth getting a different card. Note that these charges apply to
any foreign currency transaction, such as mail order from other
countries, or visits into Canada.


Dan,
I'm not sure that "most" banks add this fee, but some of the larger ones
do,
and there is no justification for doing it, aside from greed. Since
learning
about this practice, I think I'm about to dump my "backup" credit card. No
sense in paying the extra fee when you don't have to.

Also, watch out for merchants charging you in dollars while overseas. When
they do the conversion, it is not to your advantage.

However, unless you plan to spend $ million or so, the %1 credit card &
ATM
exchange fee is the best deal going.

--
Donald R. Newcomb
DRNewcomb (at) attglobal (dot) net

In article ,
"Donald Newcomb" wrote:

I'm not sure that "most" banks add this fee, but some of the larger ones do,
and there is no justification for doing it, aside from greed. Since learning
about this practice, I think I'm about to dump my "backup" credit card. No
sense in paying the extra fee when you don't have to.

I used to have a Citibank Visa and still have an Amex.

I use an MBNA because it doesn't charge anything beyond the wholesale
currency exchange rate.

It's been that way for years though, so I don't know about this "new"
fee.

"Frank F. Matthews" wrote in message ...
And do you have any suggestions for transferring funds for less overall
cost?


I think that using an ATM is probably the best method. However, on a
recent trip I was unable to use my ATM card (see recent post in this
group titled "Mastercard ATM problems: Warning"). Next best is using
a credit card, as long as you get one that only charges the 1% fee,
and not an additional fee beyond that. This also has the convenience
of it being a credit card, i.e. don't need to carry a lot of cash,
don't need to pay until you return home, etc.

"Dan K" wrote in message
I think that using an ATM is probably the best method. However, on a
recent trip I was unable to use my ATM card (see recent post in this
group titled "Mastercard ATM problems: Warning"). Next best is using
a credit card, as long as you get one that only charges the 1% fee,
and not an additional fee beyond that.

Well it depends about your credit card. I have a Visa that's issued by
European country and there are NO fees or hidden costs when you make a
purchase with it. The exchange rate is always better when you are using the
Visa. Let's say I'll go the UK and buy something from there. I have three
choices:

Take the money from ATM in UK. (2.5% percent fee)
Change my euros to pounds before the trip.(Usually a fixed fee for the
exchange)
Use Visa. (No fees or comissions and the best rate for the conversion.)

Paying the purchase with Visa is always the cheapest way for me. You must
have some other systems in US if you are saying that this is the expensive
way.

Chris Blunt wrote in message . ..

The surcharge on the conversion rate applied by Visa and MasterCard is
much less than 1% - probably more like 0.1% or 0.2% at most. I have a
credit card that doesn't charge any conversion fee, and the overall
exchange rate I get seems to be within 0.2% of the interbank exchange
rate.

I guess banks will pay that 1% provision for VISA and Mastercard
institutions. Fee is just embedded so you cannot see it on the bill.
As so many people have told me: no free dinners.

wrote:
Chris Blunt wrote:
The surcharge on the conversion rate applied by Visa and MasterCard is
much less than 1% - probably more like 0.1% or 0.2% at most. I have a
credit card that doesn't charge any conversion fee, and the overall
exchange rate I get seems to be within 0.2% of the interbank exchange
rate.

I guess banks will pay that 1% provision for VISA and Mastercard
institutions. Fee is just embedded so you cannot see it on the bill.
As so many people have told me: no free dinners.

But Chris can calculate the effective rate of exhange by looking up the
interbank rates from the date of the transaction. There's no way the bank
can hide that.

I often get exchanges at about 0.5% above interbank using an ATM card.

miguel