While you're patting
yourself on the back for seeking out the best deals
possible for airfare and hotels on your upcoming trip
to another country, there's one other money matter you
may be forgetting that could hit you where it hurts:
|Whether you use
a credit card, debit card, traveler's checks
or cash, you'll be charged to convert your
dollars to euros, pounds or pesos. But some
options are clearly better deals than others.
Credit cards offer the best exchange rates due to the
associations' bulk purchase capability.
"We're able to buy all types of global
currency at wholesale rates," says Rhonda Bentz,
vice president of Visa USA. Credit card users will pay
a foreign transaction fee of between 2 percent and 4
percent on their purchases, Bentz says. That compares
to fee of between 6 percent and 7 percent that a bank
would charge to exchange your dollars in-country.
Remember, fees are on top of the rates,
which may or may not be to your advantage. In England,
for example, the pound is currently worth about twice
the dollar, so you'll get a little more than 10 pounds
for $20, plus pay the fee. In Canada, you'll get about
$1.10 for your U.S. dollar, plus a fee. You can use
calculator to compute any currency
Kathy McCabe, editor and publisher of
the Washington D.C.-based subscription travel newsletter,
of Italy, agrees credit cards are best.
"If you don't get socked by the bank's
fees, you get charged a high currency-conversion rate
or vice versa," says McCabe, who travels to Italy
about three times a year. She added that travelers should
also avoid changing money in airports, train stations
or near tourist sites, where fees can be as much as
Finding out exactly what fee you'll pay
on your credit card transaction can be tricky, however.
On statements, it could be embedded in the purchase
price. It could be buried in the fine print you received
when you originally got the card. The terminology used
can be complicated, too.
Visa and MasterCard charge a 1 percent
international service assessment (ISA) to the banks
that issue their cards. The issuers, in turn, can pass
that ISA on to cardholders, plus tack on their own foreign
transaction fees, usually another 1 percent or 2 percent.
Fritz Elmendorf, vice president of the
Consumer Bankers Association, which represents major
bank-issued cards including Bank of America, Citigroup
and Chase, says that 3 percent is the norm -- 1 percent
going back to Visa or MasterCard and the remaining 2
percent to the bank. Capital One's foreign transaction
fee is the exception, Not only charging no transaction
fee of its own, but eating the 1 percent earmarked for
Visa and Mastercard.
"It obviously pays to check and be
aware of that," he says "It's something you
want to call your card company about."
American Express, which does not issue
cards through banks, charges a 2 percent foreign transaction