Whether you have taken that much-awaited vacation to the Netherlands, are visiting family in London, or flying out to Germany on a business trip, your credit card may be your sole financing solution. While planning your international trip, you may have saved up, used your investment returns or bought tickets on EMI, but while you’re on your trip, you may rely on simply swiping your credit card. However, it is not until you have returned home from your trip that you are exposed to the financial reality on your credit card statement.
While taking the time to calculate currency exchange rates and limit your spending is important, you also need to pay attention to the excess charges involved in international credit card payments. Read on to know about the different internationals charges you may have to pay on using credit cards abroad.
Understand The Foreign currency Conversion Fee
When you make an international transaction using your domestic credit card, you will be charged a foreign currency conversion fee. This ranges between 1% and 2%, depending on the type of card used, Visa or MasterCard. Also, if you are charged a tad bit over and above this figure, you can safely assume that it is a small profit margin charged by the banks or issuers.
Remember The Foreign Transaction Charge
Banks also charge you a foreign transaction fee for every transaction you make with your credit card. This may be around 2.5% – 3.5% of the total transaction amount.
Pay Attention To The Cash Advance Fee
Remember, credit cards are not ATM cards. Hence, credit card withdrawals attract cash advance fees that increase your total credit card bill. You already know that domestic cash withdrawals are expensive unless you have a credit card that allows for free ATM withdrawals. So, you can easily expect to be charged an additional fee of 1% –4% on every international cash withdrawal.
Merchants post your transactions to VISA or MasterCard after a day or two of the actual dates. Visa and MasterCard calculate a single exchange rate, a day in advance, which is applicable throughout the day for every transaction. Therefore, before taking a foreign trip, you would do better by reading about Foreign Currency Conversion fees on VISA and MasterCard websites.
Also, learn about the Foreign Transaction Charges and Cash Advance Fee from the credit card issuing banks or companies. You can do this easily by speaking to the customer care representatives before travelling overseas.
If you are yet to apply for a new credit card, shop around to get a card that has the least charges, keeping in mind your expense patterns. While applying, make it a point to read the offer documents before tossing them to the back of your locker. If you read carefully, you might be surprised to learn important facts that may ultimately increase or decrease your credit card charges on international travel.