Saving Money On Currency Transactions When You Travel
Having a credit card with no foreign transaction fees can be a big help
Sunday, June 17, 2012
When traveling from one country to another, a credit card often makes it easier to navigate. Whatever the currency, plastic makes it nearly universal.
It can also save you money. A currency exchange study by Card Hub shows no-foreign-fee credit cards are the best spending tools for international travel, saving consumers an average o 8.1 percent over banks and16.2 percent compared to airport exchange services.
“Exchanging currency tends to be an important pre-trip task for international travelers, but as this study illustrates, doing so is not only unnecessary, but it will also cost you quite a bit of money,” said Card Hub CEO Odysseas Papadimitriou. “Using a Visa or MasterCard credit card with no foreign transaction fees, on the other hand, allows you to save as well as avoid undue hassle, given that currency is converted automatically whenever you make a purchase.”
Fees are usually low
Even if the traveler uses a credit card that does assess a foreign fee, it's usually not that much. The study found the average foreign transaction fee is 2.38 percent. That's still a net savings of 5.72 percent compared to banks and 13.82 percent compared to exchange services provided at airports. While the cost of converting currency at banks and airport kiosks increased over last year, the cost of doing it with a credit card actually decreased, thanks to a decline in the average foreign transaction fee.
As for banks, the study finds that Northern Trust and Harris Bank are the least expensive when it comes to currency transactions. The most expensive are U.S. Bank and Fifth Third Bank. Banks' currency conversion fees are largely unchanged from last year, with the exception of Wells Fargo, which dropped its fee from $12 to $7.
When traveling in another country, it's also helpful if your debit card has low international ATM withdrawal fees.
“A debit card with low foreign transaction fees will also come in handy because you will need cash for certain travel expenses, such as cab fare, Papadimitriou said. “You’d rather get the low Visa/MasterCard exchange rate and withdraw cash as needed than have to trade in dollars at an unfavorable rate and risk getting pick-pocketed while carrying more cash than you need.”
And before taking your trip, Papadimitriou suggests notifying your bank and credit card company that you are leaving the country. Otherwise, they might suspend your credit and debit cards when they see what may appear to them to be suspicious activity.