Traveling? Careful Of Transaction Fees When You Buy Abroad!

The ability to stroll down the streets of Hong Kong, hit the pubs of London and shop for souvenirs from Paris all with a single credit card in tow is one of the plastic’s main advantages.  You can even get cash back, if you have the right card.  As a result, growing numbers of consumers use it as currency during overseas travel.

If you’re traveling to other countries and intend to use your credit card for local purchases, however, you might want to check what kind of exchange rates you will get before swiping that plastic for international bargains (hint: it’s usually higher than existing forex rates).  More importantly, your credit card company is likely to charge additional fees for purchases made in foreign lands.

Foreign transaction fees, in particular, can prove a deal-breaker, essentially packing extra costs for every single time you use it.  Visa and Mastercard charge an even 1% for all foreign spending.  Save for Capital One and Discover, all card issuers charge their own fees as well.

The following table lists the known foreign transaction fees charged by different card issuers.  Charges will be computed on the dollar conversion of whatever you bought.

HSBC - 3%
Wells Fargo - 3%
Bank of America - 3%
Chase - 3%
Citi Bank - 3%
American Express - 2%
Washington Mutual - 1%

If you have an HSBC Visa card, for instance, that means an extra four percent markup (1% from Visa, 3% from HSBC) on any purchases you make on your credit card - quite considerable, especially when using it during your whole stay.  Still, few options have proven more cost-effective and safe than credit cards as an overseas payment method.