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While traveling abroad, every credit card transaction will usually tack on an extra 3% for a foreign transaction fee—unless you’re using a card that waives this fee. What’s 3% anyways? Well, it adds up and we don’t like paying for something that’s absolutely avoidable.
Mastercard vs Visa vs American Express
Mastercard will use the exchange rate on the date of the transaction whereas Visa and American Express will use the rate when the transaction is processed, which could be a day or two later. Most of the time, the fluctuations in rates are negligible from day to day but keep this info in the back of your mind.
When deciding on a card, factor in how you’ll be spending with it at home since this is where you’ll be using it the most. Does the card offer bonuses for travel, hotel stays, dining, etc? How lucrative is the sign up offer? Ask yourself these questions to narrow down potential cards.
Dynamic Currency Conversion (DCC)
A fancy, new, no foreign transaction fee card isn’t going to help get rid of all fees though. There’s another fee you need to side-step called dynamic currency conversion. Some vendors will give you the convenient option of presenting your bill in your home currency (e.g., US Dollars). While they do the math for you there is no other benefit other than to put more money in the merchant’s pocket. The conversion rate is not going to be in your favor to the tune of 3-7% more that you’ll spend. If you are presented with the option always ask to be charged in the local currency. Should you be presented with a bill already converted to your home currency:
- Refuse to sign it
- Have the merchant cancel the transaction
- Have the merchant re-process the transaction in the local currency. You may run into merchants who pretend to not understand the issue or refuse to re-process the transaction—if so pay with one of the following options
- Pay with cash
- Pay with American Express. American Express does not charge DCC fees or have it as an option—combine it with an American Express Card that does not charge a foreign transaction fee to save
Just because you have a no foreign transaction fee card does not mean you’re not subject to DCC. Often you’re shelling out an extra 3-7% due to the poor exchange rates. Please keep this in mind when paying for your bill!
Here’s a short list of credit cards that do not charge a foreign transaction fee:
- American Express Premier Rewards Gold Card
- BankAmericard Travel Rewards Credit Card
- Barclaycard Arrival Plus World Elite MasterCard
- Capital One VentureOne Rewards Credit Card
- Chase Sapphire Preferred
- Chase Sapphire Reserved
- Citi / AAdvantage Gold World Elite MasterCard
- Citi Prestige Card
- Citi ThankYou Premier Card
- Hyatt Credit Card
- Starwood Preferred Guest Card from American Express
- Platinum Delta SkyMiles Credit Card
- The Platinum Card from American Express
- United MileagePlus Explorer Card
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