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This article was last updated Jan 22, 2014, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
Traveling abroad is filled with uncertainty, especially when it comes to fees. And nowhere is there more confusion than with the exchange rate you face when you pay with your travel credit card. Are you getting fleeced like you do at kiosks? Will there be extra fees? None of us likes to see a nasty surprise on our credit card statements after returning home, but it happens all too often to all of us.
The good news is you can see exactly what exchange rate you’ll be offered when you use your card for foreign purchases by checking online. That’s because Visa® and MasterCard were forced by the European Union to disclose these rates on a daily basis, which apply for all customers globally, and there is good news.
Below are the rates we found at the writing of this article for exchanging dollars to popular foreign currencies. Lower numbers are better. The rates for credit card purchases are very competitive – almost identical to the rates set on the floors of market exchanges every day. And a lot better than what you’d get from Travelex at the airport, which is much higher and ends up being a tax on forgetfulness.
Here are sites check the exchange rates on foreign transactions your card will use right now:
- Visa® current exchange rates
- MasterCard current exchange rates
American Express doesn’t post the exchange rate it uses, but in our experience it is very close to that of Visa® and MasterCard. The variable is the ‘settlement date’ which can be a little later than the day you made your purchase, depending on when the merchant reports the charge.
There are other traps to consider…
Dynamic currency conversion
This is when you are given the choice to pay in the local currency, or pay in dollars. Usually you’ll see a selection pop up on the card terminal giving you this option. Choosing to pay in dollars will incur an extra fee – often 4% or more – so avoid this option. There is no rational reason for a U.S. cardholder to pay it.
The companies that provide this service say it’s useful because you’re “certain” of the rate you’ll be paying, but there is always an extra fee associated with it, and if you have a card with foreign transaction fees you’ll still get hit with a foreign transaction fee on top of it because the purchase takes place in a foreign country, so you could be paying an extra 7% or more on your transaction. With the exchange rate offered by Visa® and MasterCard so competitive and easy to check there’s little reason to accept handling your credit card purchase in dollars when you’re in another country.
Unfortunately some merchants like restaurants don’t always let you see the terminal, letting one of their employees swipe your card. And at those places make sure you ask to pay in the local currency to avoid the extra fee.
One trick – American Express does not allow dynamic conversion and its fees, so if you’re unsure, use your American Express card to pay and you won’t face that charge.
Foreign transaction fees
Visa® and MasterCard usually add 1% to foreign transactions, and the bank that issues your card may add another 2% or so. But with cards marketed with no foreign transaction fee as a feature you won’t pay these fees. We have a list below.
Here is a list of travel miles cards with no foreign transaction fees:
- All Capital One credit cards
- All PenFed credit cards
- Bank of America® Travel Rewards credit card - 25,000 Bonus Points Offer
- British Airways Visa Signature® Card*
- Chase Sapphire Preferred® Card
- Citi ThankYou® Premier Card
- Citi Prestige® Card*
- Citi® / AAdvantage® Executive World Elite™ Mastercard®
- Gold Delta SkyMiles® Credit Card from American Express
- Discover it® Cash Back
- Discover it® Balance Transfer
- Discover it® Miles
- Discover it® chrome
- IHG® Rewards Club Premier Credit Card
- The Hyatt Credit Card*
- Marriott Rewards® Premier Plus Credit Card*
- The Platinum Card® from American Express
- The Ritz-Carlton Rewards® Credit Card*
- Southwest Rapid Rewards® Premier Credit Card
- United℠ Explorer Card*
*The information related to this credit card offer has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.