It is important to understand the fees associated with both your debit and credit cards when traveling abroad because they can eventually add significant and unnecessary costs to your trips. Because international transactions are more expensive for the banks to process than domestic transactions here in the U.S., most banks will charge a foreign currency conversion fee to offset their costs.
If you know what the different rates and fees for each card you will have available on your travels outside the U.S will be, you can obviously save some cash by using the cards with the lowest charges. You can learn what the different fee structures and currency conversion rates for any card you might have now simply by calling the telephone numbers on the back and asking the customer service representative to explain the company’s policies. Many times, the fees will be identical for different cards as many of the cards from big banks like the MBNA Platinum Plus MasterCard and the President’s Choice Financial MasterCard, first convert all transactions made in foreign currencies into U.S. dollars before charging their own conversion fee equal to 2.5 percent of the converted transaction amount.
One option to save the 2.5 percent fee is to not use your credit cards at all and use debit cards instead. Although many banks will not allow you to make foreign purchase transactions with your U.S. bank debit card, you can use the debit cards at an ATM to get enough cash to complete the transaction. However, you still have to watch the bank’ fees on your debit cards too, as many will charge a flat fee of up to $5 to withdraw money from bank machines outside of the U.S. Some debits cards will also charge a fee of 2.5 per cent of the converted amount in addition to the withdrawal fee, and those fees and charges can add up fast when you’re shopping overseas.
Avoid doing business with foreign merchants who try to take advantage of tourists by quoting purchase prices in U.S. dollars, instead of in the local currency. This allows the merchant to select his own exchange rate that will always be much higher than what your credit card charges. You’ll save money if you know the true foreign currency conversion rates for the areas you are traveling in.
Before you hop on the plane to Europe or beyond this summer, you might want to consider calling your credit card company to tell them you are planning an overseas trip. If you don’t take time to notify the card issuer of your travel plans you run the embarrassing and inconvenient risk of having your cards declined or suspended due to suspicious foreign charges. It is better to let the card company know where you will be going in advance. You should also check the expiration dates on any cards you will be using overseas to make sure they will not expire in the middle of your trip. It will be a lot easier and more secure to get a new card if you need one while you are still here in the United States than it would be to get them abroad of course.
It will be easier to keep track of your spending if you stick to just one main card for purchases abroad, but you should also bring a backup card in case of an emergency, like losing your wallet. No one plans to lose their wallet while traveling, but it does happen. Before you go on your trip, make photocopies of your credit cards and then email them to yourself so that you will have the information needed to call the credit card company and cancel your cards in the event that they are lost or stolen.
