When a consumer who uses a credit card from the USA , makes a transaction in a foreign country, a transaction fee of about two or three percent will usually have to be paid.
Many credit card companies did not clearly disclose or explain these fees in their terms and conditions until recently. Many people received notification of a class action lawsuit settlement in regard to these fees early last year. Credit card companies must clearly inform their applicants of all international transaction charges, because the lawsuit has now been settled.
If you wonder how much your current credit card company will charge for your international transactions, after calling the customer service number to find out, most will probably inform you that the fee is three percent. It can end up causing a lot of added expenses, if you have to pay an extra three percent on every purchase, but you can possibly find a way to avoid these charges.
Your own bank will often give a much better exchange rate for foreign currency than you will be likely to receive at a foreign currency exchange booth.
Even though ATM withdrawals are usually free of foreign transaction charges, using your debit card as a credit card can have some risks. A credit card is easier to protect from fraud than a debit card when making purchases abroad, so this is why it would be better to use a credit card at these times.
When there are fraudulent charges and overcharges made on your credit card, you can contest them and receive a refund on your credit card account. When a debit card is used in a fraudulent manner, it will not only lead to an empty bank account, it will take longer for you to see any refunds on the stolen money.
The only way to keep from paying international transaction fees, seems to be to use a credit card that does not charge these fees; and with these no fee credit cards you get the security provided by a credit card without any added expenses.
ATM transactions charge a small fee each time, so you can know how much you are spending; this is as great for day to day life as it is when you are on vacation. Unless you are on a very exacting budget, it is difficult to judge how much to withdraw in one ATM transaction; most people cannot tell precisely how much cash they will need while traveling. A cash machine can be difficult to find in many countries, but you have to refrain from withdrawing too excessive of an amount at one time to avoid the risk of being robbed.
You will find that you have to pay a fee to convert funds back to your local currency in addition to the fees you had to pay to convert to foreign currency.
Traveler’s checks are a safe alternative to cash, however, they are not accepted everywhere and there is a fee to purchase them.
When applying for the credit card you believe will not charge any additional fees for foreign purchases, be sure you study the terms and conditions carefully to be absolutely sure the card you are getting is the right one. Before you use the card, check the terms of it to be sure you can pay the balance off fast, if the interest rate is high, so you won’t be paying extra fees in another way.
Alisdair Cosgrove is a freelance writer specializing in personal finance. You can read more of his work at www.JSNet.org for
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