Using a credit card abroad can be convenient, but it’s important to be aware of any fees that may be incurred. Here’s what you need to know about using credit cards abroad:
International Transaction Fees
Many credit cards charge a fee for international transactions. This fee is usually a percentage of the transaction amount and can range from 1% to 3% or more. Some credit cards, however, do not charge any international transaction fees. It’s important to check with your credit card issuer to determine if this fee applies to your card.
Are there any credit cards that do not charge international transaction fees?
Yes, there are many credit cards that do not charge international transaction fees.
- Best for Cash Back: Alliant Cashback Visa® Signature Credit Card
- Best for Dining Out and Restaurants: Capital One Savor Cash Rewards Credit Card
- Best for Luxury Travel: Chase Sapphire Reserve®
- Best for Hotels: Capital One Venture Rewards Credit Card
What is a foreign currency conversion fee, and how does it differ from an international transaction fee?
A foreign currency conversion fee is a charge that is applied when you make a purchase using a credit card denominated in a currency that is different from the currency of your credit card account. This fee is usually a percentage of the transaction amount and can range from 1% to 3% or more.
On the other hand, an international transaction fee is a charge that is applied when you use your credit card to make a purchase from a foreign merchant or when you make a purchase that involves a foreign bank or payment processor. This fee is also usually a percentage of the transaction amount, and it can range from 2% to 5% or more.
The main difference between these two fees is that the foreign currency conversion fee is charged when you make a transaction in a foreign currency, while the international transaction fee is charged when you make a transaction with a foreign merchant or payment processor.
In other words, the foreign currency conversion fee is related to the exchange rate between the two currencies, while the international transaction fee is related to the cost of processing a transaction with a foreign entity.
What is a dynamic currency conversion, and why should I avoid it?
Dynamic currency conversion (DCC) is a service offered by some merchants that allows customers to pay for products or services in their home currency instead of the local currency when traveling abroad. It is a type of currency conversion fee that is charged by the merchant’s service provider and is usually higher than the fees charged by credit card processors. DCC can be presented to the customer as an option during the transaction process, but it is important to understand that choosing DCC can result in a more expensive exchange rate.
One reason why customers should avoid DCC is that the exchange rate used by the merchant’s service provider is often less favorable than the rate provided by the credit card processor. This means that the customer may end up paying more for the transaction if they choose to use DCC. In addition, DCC may include additional fees, which can further increase the cost of the transaction.
Another reason to avoid DCC is that it can be confusing and misleading. Customers may not fully understand the exchange rate being used or the additional fees that are being charged. In some cases, merchants may even misrepresent the cost savings of using DCC in order to encourage customers to choose this option.
Overall, it is usually best to avoid DCC and instead pay in the local currency when traveling abroad. This can help to ensure that the customer gets the most favorable exchange rate and avoids any additional fees or confusion associated with DCC.
Tips for Using Credit Cards Abroad
Here are some tips to help you use your credit card abroad without incurring unnecessary fees:
- Use a credit card that does not charge international transaction or foreign currency conversion fees.
- Notify your credit card issuer of your travel plans to prevent any issues with your card being blocked for suspicious activity.
- Avoid using your credit card for cash advances, as these transactions often come with high fees and interest rates.
- Be aware of your credit card’s fraud protection policies and report any unauthorized transactions immediately.
What should I do if my credit card is blocked while I’m traveling?
If your credit card is blocked while you are traveling, it can be a frustrating and potentially stressful experience. However, there are steps you can take to resolve the issue and ensure that you have access to your funds while on your trip. Here’s what you should do:
- Contact your bank or credit card company: The first thing you should do if your credit card is blocked while traveling is to contact your bank or credit card company. You can do this by calling the customer service number on the back of your card or through the mobile banking app. Explain the situation and ask them to unblock your card.
- Verify your identity: In some cases, the bank or credit card company may have blocked your card as a security measure if they suspect fraudulent activity. They may ask you to verify your identity by answering security questions or providing additional information to confirm that you are the authorized cardholder.
- Check your account for any issues: Before your card was blocked, it’s possible that there were issues with your account that caused the block. Check your account online or through the mobile banking app to see if there are any outstanding payments, suspicious transactions, or other issues that need to be resolved.
- Request a replacement card: If your card cannot be unblocked, you may need to request a replacement card. This may take several days to arrive, so make sure to plan accordingly.
- Have a backup payment method: While you’re waiting for your card to be unblocked or for a replacement card to arrive, it’s important to have a backup payment method. This can be another credit card, a debit card, or cash. Keep this backup payment method in a separate location from your primary card to avoid losing both at once.
- Update any automatic payments: If you have any automatic payments set up with your blocked card, make sure to update them with your new payment information once your card is unblocked or replaced.
Comparison Table of Credit Card International Transaction and Foreign Currency Conversion Fees
To help you find a credit card that is best suited for international use, here’s a comparison table of some popular credit cards and their international transaction fees and foreign currency conversion fees:
| Credit Card | International Transaction Fee | Foreign Currency Conversion Fee |
|---|---|---|
| Chase Sapphire Preferred | 0% | 0% |
| Capital One Venture Rewards | 0% | 0% |
| American Express Platinum | 2.7% | 0% |
| Discover it Miles | 0% | 0% |
| Citi Premier Card | 3% | 0% |