In the process of planning some upcoming international travel, here’s what we’ve discovered about credit card foreign-exchange fees. This is based on information from the credit card terms-and-conditions literature, the card company’s website, or from talking with customer-service personnel. It may not be correct for your card or your travel situation. It may also not apply to all cards in a company’s lineup. Check with your card company, but this seems to be the latest we could find:
Capital One charges 0% foreign-exchange fees.
HSBC charges 1-3% foreign-exchange fees.
Washington Mutual charges 1% foreign-exchange fees.
America Express charges 2% foreign-exchange fees, but is not as widely accepted internationally.
All other cards we researched charged 3% or more.
Since most “reward” cards (miles, points, cash-back, etc.) generally offer their rewards at roughly equivalent to 1% – and some do not offer rebates/rewards for non-U.S. purchases – the reward would seem generally not enough to offset a higher foreign-exchange fee. Also remember that should you return a purchase while overseas, you’ll get hit with the foreign-exchange fee again for the credit. Finally, don’t ever fall for a merchant’s offer to charge the purchase in U.S. dollars instead of the local currency. Again, you’ll pay dearly in increased fees.
ATM fees are another matter. Most banks (probably yours) charge a fee for use of a “foreign” ATM – but in bank-speak this means any ATM that is not one of theirs. This is usually a fixed amount – we’ve seen most of these fees range from $1.50-$5.00 per ATM withdrawal. Which means, withdraw as much as you think you’ll really need, rather than smaller amounts several times. But... don’t get so much cash that you’ll have to convert it back to dollars, as then you’ll really take a hit. We’re generally really pleased with ourselves if all we have left after our trip is a few dollars worth of coins (which will come in handy for our next trip). ATMs also charge a 1% wholesale exchange commission, on top of the fee above.
Two ways to lower your ATM fees that you might consider:
1 – Get an HSBC ATM card, and hope that you can find an ATM in the wide HSBC network (18,000 locations). A good way to do this is to open a free on-line checking account with HSBC, fund it with only a little more than you think you’ll need in cash for your trip (to limit your potential theft/fraud loss), and get an ATM card linked to that account only.
2 – Get an ATM card from Bank of America. BofA is a member of the Global ATM Alliance, which claims 12,000 ATMs operated by member banks in the U.K., Germany, Australia, New Zealand, France, China, Mexico, and Canada.
Despite the fees, credit cards and ATM cash withdrawals are still better and cheaper than carrying traveler’s checks or exchanging hard dollars for local currency. Still, you might as well pay as little as possible for the convenience and safety of plastic.
Old postcard, Thames Embankment, London, 1928