Everywhere you look,
have been on the rise. So when banks actually start
some of their fees, it's cause for celebration. Unfortunately, you
won't realize the benefits of those cuts until the next time you
take an international trip -- but when you do, the savings could be
In recent months, a number of credit card issuers, including
) , and
(NYSE: JPM) , have reduced the charges they add when you make
foreign transactions on certain cards they offer. By doing so,
they've taken away one of the least-recognized fees that
cardholders ever have to pay.
Understanding foreign transaction fees
It's not ridiculous for banks to want to add at least
fee for foreign transactions. After all, when you buy something
with your credit card abroad, your card company has to provide
foreign currency to the seller, handle the currency conversion,
then later bill you in U.S. dollars. By doing so, you avoid the
hassle and expense of using more costly services like airport
currency exchange kiosks to trade greenbacks for foreign cash.
things get out of hand
in the frequent layering of fees.
(NYSE: V) and
(NYSE: MA) , for instance, have long charged 1% for their various
branded cards. Issuing banks often add their own extra charges on
top of that. As a result, cards from several issuers, including
(NYSE: WFC) and
(NYSE: USB) , end up taking a total cut of 3% from foreign
Moreover, exactly what constitutes a "foreign transaction" has
changed over the years. You might think the fee should only apply
if it actually involves a foreign currency, but now, any
transaction that involves a non-U.S. bank in any way triggers the
expense. So even if you arrange to pay someone in U.S. dollars, you
might still get hit with the fee.
How to travel cheaper
Perhaps the toughest thing about the foreign transaction fee is
figuring out that it exists in the first place. If you look hard,
you'll typically find it buried in all the fine print you skim over
when you first sign up for a credit card. But since most people
travel only occasionally, most people don't have a lot of
experience with that fee.
To make the most informed decision, use this simple process:
- Before you leave on your trip, call your credit card
companies and ask what the foreign transaction fee is. It's also
a good opportunity to let them know that you're leaving, since it
alerts their fraud prevention unit that the unusual charges
you'll be racking up are legitimate.
- If a card you have doesn't charge a fee, you're done -- just
use that one. But if all your cards charge fees, do a quick
cost-benefit analysis: Does it make sense to sign up for a
competitor's card? If you travel infrequently, probably not. But
if you're a global jetsetter, it may well be worth paying up for
a card that gives you a break on foreign fees.
In addition to select cards from the issuers mentioned above,
has a long-standing policy of not charging foreign transaction
fees. The company even eats the 1% that Visa and MasterCard charge,
leaving you free and clear without any fee at all.
Don't leave home without it
With all the complications of planning a foreign trip, the last
thing you need to worry about is whether your credit card will
rip you off
by adding a huge hit to your monthly bill. By taking a few minutes
to get familiar with your card's foreign transaction fees, you can
avoid a big surprise when you get back from your trip.
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travels fee-free. He doesn't own shares of the companies
mentioned in this article. American Express and Visa are
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