How to Avoid Foreign Transaction Fees
If you’ve ever went on an international vacation or purchased something online in a foreign currency, then you’ve probably been the victim of a foreign transaction fee. Most credit card banks levy a 3% fee on international transactions in a foreign currency. We here at Thrifty Traveler avoid any unnecessary foreign transaction fees. Every avoided fee is money for more travel! There is absolutely no reason why you should be paying extra fees when there are many credit cards that offer a no foreign transaction fee as a benefit. The following Thrifty Tips will help you save a bundle on your next trip!
Thrifty Tip #1: Before traveling consider applying for a credit card with no foreign transaction fees. My favorites would be the Chase Sapphire Preferred or Barclays Arrival Card. There are many others listed in my Top Credit Cards.
Thrifty Tip #2: When using a credit or debit card, always pay for items in the local currency. Sometimes businesses will offer to convert to dollars and it might seem like a good idea, but it usually will cost you more. The conversion from the local currency to dollars will typically use a poor exchange rate.
Thrifty Tip #3: When you land at your international destination use the ATM at the airport to withdraw money. ATM’s typically have very good exchange rates, but do have an ATM withdrawal fee similar to back home. Take out enough to justify the fee and limit future trips to an ATM. Also make sure to contact your bank before you leave to let them know you will be traveling. This will ensure your ATM card will work upon arrival. If you are nervous about arriving in a foreign country with no money then bring some cash along, you can always convert it, but it will not be at the best exchange rate. To avoid ATM fees altogether get a Schwab Checking account.
Thrifty Tip #4: Don’t take out foreign currency at your local bank in the United States before you leave. There is typically a large fee or poor conversion rate.
Thrifty Tip #5: Avoid exchanging US dollars at the airport for local currency. It is rarely a good deal, except in Cuba, where you have no choice.
Dealing with foreign currency can be confusing. It’s hard to know what’s the best way to turn your hard-earned dollars into local currency. Hopefully the tips I’ve provided will help clear up some of the confusion. If you have any additional questions please leave them in the comments below.
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