Beware of Using Your Credit Card Internationally

Posted on 28. Jan, 2009 by in Credit & Debt

I’ve been working in India for the past 3 weeks and have learned a few things about using a credit card in a foreign country. The last time I was in a foreign country was over 6 years ago but was there for so long that I opened a local bank account and was able to avoid any fees.  However, for most of us, travelling to a foreign country means bringing along our own debit/credit cards – so here are a few things to keep in mind.

Inform Your Credit Card Company / Bank You’re Leaving

Before leaving on your trip – no matter how long or short it may be – give your bank and/or credit card company a call.  Inform them that you’ll be travelling and be sure to give them the dates you are travelling and to which countries.  This will prevent your card from being “flagged” for fraudulent activity.  If the credit card company sees your card suddenly being used in India – someplace you’ve never travelled before – then you could find your next purchase declined due to fraudulent activity.  Calling your bank or credit card ahead of time will save you time and frustration.

Fees, Charges, and Conversion – Oh My!

Something that many people do not know is that credit card companies like to take advantage of international travelers by charging them fees for using their card abroad – but it doesn’t stop there.  Not only will a company charge you a fee for using your card overseas, but they might also charge you a currency conversion fee.

International Fee: This fee is charged by most credit card companies for any purchase made internationally.  This fee, typically added to your purchase price, mean you could end up paying as much as 10 percent more for purchases made while abroad.  The latest fee rates I could find are:

Bank of America
• 3% for credit/debit card purchases
• $5 and 1% at ATMs; fee waived if using Global ATM Alliance machine

Chase
• 3% for credit/debit card purchases
• 3% of ATM withdrawals

Citibank
• 3% for credit/debit card purchases
• 3% at non-Citibank ATMs
• Will reimburse ATM fees if you applied for a checking account online

HSBC
• 1% for credit/debit card purchases
• $1.50 max for ATM fee

Wachovia
• 1% of credit/debit card purchases
• 1% of ATM withdrawal PLUS network fee

Washington Mutual
• 1% of credit/debit card purchases
• 3% of ATM withdrawal PLUS 1% charged by
Master Card and Visa

Wells Fargo
• 3% credit/debit purchases
• $5/withdrawal at ATM

Dynamic Currency Conversion Fee: A relatively newcomer to the fee-charging party, this fee allows a foreign merchant to convert your bill from foreign currency to U.S. dollars using their own rates (which of course are higher than normal). However, DCC is only used with Visa and MasterCard – American Express charges 2.5 percent per day for foreign transaction fees and they do not charge cardholders DCC rates. The fee for DCC ranges between 3–10 percent depending on the fee charged by the technology partner and the fee charged by the bank issuing the debit/credit card.

Conversion Fee: Your bank might charge you a 1 percent to 3 percent “foreign currency-conversion fee” for the service of converting the local currency cost of an international purchase into the U.S. dollar amount that shows up on your credit card bill.  How nice of your bank, right?

Find a Solution That Fits

Knowing now that using your credit or debit card could be costlier than you thought – what should you do?  You have a few options:

1. If time is on your side, consider finding a card or bank that doesn’t charge these ridiculous fees (Capital One seems like a good choice)

2. Consider using your corporate card – the user agreements are much different.  For example, my corporate AMEX card doesn’t charge me an international fee – so I’ve been using it for personal purchases as well.

3. Look into purchasing a pre-paid Visa or Mastercard in the country you will be traveling to.

4. Carry cash. It goes without saying that carrying cash is more risky than plastic – but the fee for taking out cash for a day’s worth of purchases might be cheaper than a 3% charge on each purchase with plastic.

The best advice I can give you is to invest some time preparing your finances before you leave.  Travel can be stressful enough without worrying about your money.

One Response to “Beware of Using Your Credit Card Internationally”

  1. mooracle

    09. Mar, 2009

    wow I just find out that there is a conversion rate fee

Leave a Reply