One question I get all the time: Do I have to pay Foreign Transaction Fees
Are you thinking of or are you traveling abroad and have some concerns about foreign transaction fees?
Maybe you should be. It can run you quite a little bundle.
One of my clients insisted on a specific hotel and room type and although quite a great selection, had some very limiting payment options. We had to pay by a wire transfer. When I went to the bank to make a wire transfer for this Greek hotel, I almost fell out my chair when the banker told me about the fees.
Here are a few tips on how you can you avoid those fees:
When it comes to use outside the U.S., not all credit cards are created equal. Many credit cards carry a surcharge when you make purchases while traveling abroad. You may be turned on by the rewards of using your card for travel, but it may not be such a great benefit if you pay so much in fees that you cancel out the rewards in fees.
So, the questions are:
- Do you know enough about your credit card and how it works for you?
- Are you using a card that does not charge foreign transaction fees?
- Does the card you use make you feel safe when you travel abroad?
What exactly are foreign transaction fees?
Foreign transaction fees are costs added onto your statement for purchases made outside the U.S that pass through a foreign bank or are made in a foreign currency. The fee is calculated as a percentage of the purchase price, usually between 2 and 3 percent.
When you make purchase in a foreign country with your credit card, your credit network converts the foreign currency to dollars using its exchange rate process. It then charges your bank a foreign transaction fee based on that dollar amount and that amount is passed on to you.
Oops…those fees can add up!
Well durn it…how can you avoid these fees? It’s not like you are going to stop traveling internationally or stop making purchases outside the US.
Drum roll please!!!
Choose a card that do not charge foreign transaction fees. Yes, you will thank me later!
There are many types of credit cards that don’t charge a foreign transaction fee. To choose the card that is right for you, identify the type of card and then select the best one in that category with no fee.
For example: maybe you want a card with great rewards or one that is best for travel. Or, you want one with cash back.
Here are some tips to help you make the best choice for your credit card:
- Make sure the card is accepted overseas. Visa and MasterCard are the most widely accepted.
- Make sure the card has an EMV chip for maximum usability.
Chip-and-signature cards should work in pretty much all situations and should be your card of choice especially while traveling overseas. Unchipped, magnetic-stripe cards should work but may merchants may be hesitant to accept them because of the fear of being held liable for fraudulent charges
Look for useful travel benefits.
Many cards with no foreign transaction fees stand out as great travel cards thanks to their extensive travel benefits. World Elite MasterCards and Signature Visa cards offer perks like:
- Trip cancellation/interruption insurance
- Trip delay reimbursement
- Lost luggage reimbursement
- Baggage delay insurance
- 24/7 customer service
Contact us if you require asisstance with international vacation plans.