Does anyone know of a credit card to use while traveling that does not charge a foregin transaction fee?

Hi Mimi

There's quite a bit written about this topic in this forum. Try using the search facility while you're waiting for replies. Also look up "Pin Codes" and "Dynamic Currency Conversion".

Also be aware that some of us have seen data which make us believe that those cards which do not tack on a foreign currency conversion fee may very well be making up that "difference" by using a poorer exchange rate.

do you mean just the normal 1% fee, or the add'l 3% fee some cards tack on?

Worldinabag, Thanks - I'll do that!

Janisj, I mean the 3%

Most cards charge the 1%. I'm aware than many cards charge an additional 2% for a total of 3%. Do some charge 3% over the initial 1%?

And I'd question also the ones that supposedly absorb the original 1% imposed by Visa. One wonders if you are getting the same exchange rate as some other cards offer?

I've mentioned that on my ATM (I'm not talking about credit cards now) this summer, BofA charged me 1%, but at the same time the base rate of exchange was 1% LESS than the daily XE rate and 1% less than the base rate on my Visa credit cards -- that's actually still 1% less than the VISA credit card rate after they added on their 1%.

Neo--just curious, but have you asked BoA why they would do that? Take a 1% loss on the the exchange rate and then get it back by charging you the additional 1%? Seems very convoluted. Could they get some sort of a tax break out of it?

Neopatrick..

I can attest that Capital One does absorb the 1% visa fee and the rate they use is more or less in line with the currency rate on a particular day.

Rufus, I casually mentioned that to my bank manager, who was puzzled. He said that this year they started adding the 1% fee on, but that he wasn't aware they were also discounting the exchange rate. I checked over a dozen ATM withdrawals and every single one was at a 1% better rate than the base for the credit card charges before the 1% Visa fee was added on for those same posted dates.

I decided I'm be crazy to question them any further. Why question a good thing? Meanwhile, it is possible that my "Advantage" account at BofA which gets me a lot of other perks might be the reason. For example I also get two free non affiliated ATM uses per month anywhere -- and I don't think most BofA checking accounts offer that one.

I think people keep bringing this issue up because it is confusing and we all consider ourselves more or less savvy travelers, yet we have the sense that we are being ripped off; we want a definitive answer, but keep not finding one.

My latest thing is that the flat we are renting in Barcelona wants us to pay for our stay in cash upon arrival, or, we can pay by credit card but they'll charge an extra 4% fee. What to do, what to do? Can't get that much cash at an ATM the night of arrival. How bad will the exhange rate be in the US to get the cash? How much (over the 4%) will Visa charge me? It's difficult for most of us to make an intelligent decision on issues such as this.

I know the terms on my two credit cards, so it isn't confusing for me in my situation. What Visa does on your card depends on the issuer you have it with, not Visa. The printed card agreement with rates/fees that you have to receive by law should have that information on it. I think there are a few Visa cards that do not add on 3 pct (I have one), but most do, but you'd have to look up the terms on the one you have.

I have a Visa card and the exchange rate is nothing unusual, I've compared it to the interbank one for that date when I get my statement, and it's basically the same. I assume that would be standard across the Visa network, as they are doing the conversion, but I don't really know. I'm not sure what Dukey is referring to as people thinking the exchange rate itself is building in a charge on credit cards, as I don't remember seeing anyone on here saying that and having any evidence of it. But perhaps I missed that. I know for a fact that the two cards I have that do not build in a transaction fee do NOT have a worse exchange rate.

I have never heard of any incident on this board where someone said their credit card charged over 3 pct for a foreign transaction, though, so if you don't want to find out for your own card, I'd assume it would not be over that. Which is still cheaper than getting foreign currency in the US before you go, most likely -- but again, you'd have to ask your bank what they charge for that, if that's where you intend to get it. I know typical sources in the US for foreign currency (AAA or Travelex) charge a lot more than 3 pct for it. So, it sounds like you might pay a 7 pct premium for using a credit card on that Barcelona apt. That might be about the same as what some of those places charge in the US, although I think Travelex is even worse (more like 9 pct, but I haven't used them in a while).

Neo Patrick,

The reason I started this questioning is that we just got back from Italy and were charged 3% on every transaction made with our credit card, which is a VISA. I was shocked, and felt very stupid for not knowing this prior to travel. I called and they told me every credit card charges 3%, (usually hidden within the transaction). Now, I'm investigating through this forum and hopefuly finding a new card that's more reasonable. Mostly I'm trying to figure out how not to get ripped off next time.

Currently, my favorite card is AAA MBNA Visa. I have verified that it is giving me the official rate plus nothing according to the calculation using:

http://www.xe.com/ccc/

Of course, this only makes sense if you are already a AAA member. The membership cost will wipe out typical travel savings.

All my other cards charge at least 1% and more.

The 4% CC surchage on the rental vs exchange at home. I think 4% CC surchage is not bad compared to what you can get at home. Here is how I would estimate:

1) 'Estimate' cost using CC. Find historical cc rate to help you estimate the official rate such as:

http://fx.sauder.ubc.ca/plot.html

From that I can 'estimate' the official rate on arrival. If you are using a typical cc card, add 5% (1% cc exchange rate plus your landlords's 4%). That is your total CC cost. If you are using one of those 3% card, your total is offical rate plus 7% (3% + 4%).

2) To get lots of cash out at ATM, you will probably have to request temporary daily withdrawl limit increase from your bank. Additionally, you cannot get alots of money from an ATM in one transaction, so you have do do it several times. The cost of this about the official rate plus 1% or more if you use a wrong ATM/debit card. I don't like relying on ATM at night; it seems I had all my ATM problems at night.

3) Getting money at home costs me about 6%. I have used my banks foreign exchange service. I can find out exactly how much it costs me by using their online foreign currency service. It is always very bad.

Using a manned exchange bureau at home costs about 9%.

4mimi, as mentioned at the top of this thread you can do a search and get more information that you'd ever want on this topic. The general verdict seems to be that Capital One is one of the few cards that does not add on the extra 2 %, and most credit unions don't either. I go along paying Citibank the extra 2%. Some don't believe this but I get AA ff miles that I cash in at about 8 cents or more each (getting a $7000 business class ticket each summer for 90,000 miles. Spending maybe $60 each summer on $3000 worth of foreign charges doesn't really bother me --especially when I'm earning 3000 more miles towards my annual goal. But I realize it bothers a lot of people. I spend hours trying to get information from Capital One about how their "no hassles" mileage works, but it was too much hassle trying to get through to their customer service to ever get an answer to my questions.

greg,

I appreciate the info. Thanks

NeoPatrick,

Thanks for all the info - very, very helpful.

Ah, I guess I could break out my reading glasses and read the fine print on my credit card agreement.

Thank you all for your reasoned answers. The bottom line is that there are lots of us who just plain don't want to do math, and want someone to just tell us what to do!

Well, I have gotten out my reading glasses and read the fine print, but still didn't have a clue how they determine the exchange rate. I'm sure the lack of clarity is totally by design.

Wouldn't it be nice if the whole agreement was just a couple sentences and told us everything we really want to know, instead of pages of gobbledegook?

Ah, yes. I am a lawyer and it still drives me crazy.

There are a few "rules" that I think have evolved on this board - don't agree to a dynamic currency exchange; get cash from an ATM where possible. Of course, I agreed to one dynamic currency exchange in Venice; they showed me the rate, and it was within about a cent of what I thought the going exchange rate was.

While jewelry shopping in Venice, the store offered me a 10% discount if I paid for the jewelry in cash, rather than by credit card. I figured that I would have had a 3% fee had I paid with the cc, so I was saving 13%...but then, how much in fees had it cost to obtain the cash??? I assumed not 13%.

With those types of instantaneous decisions to make, I just have to decide, then try not to second guess later on, or kick myself too hard when I realize I made a stupid decision.