Be careful the next time that you leave the country. Without a few key insights, that handbag that you bargained over in Florence could end up costing you more than you ever thought, and with every swipe of your credit card or ATM cash withdrawal your travel budget could easily get out of hand. But it doesn’t have to. We’ve identified the best ways to avoid banking fees while traveling, and have hopefully made it easier for you to travel knowing about all of those annoying fees.
Understanding Foreign Transaction Fees
What is this? Foreign transaction fees are usually about 3% of a purchase, and are added by some credit card companies on non-U.S. transactions. Spend the equivalent of $300 on an excursion in Paris, for example, and the 3% foreign transaction fee is an extra $9 on your credit card statement.
The Solution: Use a credit card that does not carry a foreign transaction fee. Most of these cards offer bonus rewards and other perks, such as travel insurance and benefits on flights and hotels.
Understanding International ATM Fees
What is this? Withdraw cash from an overseas ATM, and you may be hit with a flat ATM fee that can be as high as $5. In addition, a foreign transaction fee of 3% to 5% of the amount withdrawn can apply. Combine those two fees, and taking out $200 worth of foreign currency from an ATM could cost you from $10 to $15 in fees. The ATM operator may charge a fee, too.
The Solution: Call your financial institution and ask if it has fee-free ATMs in the country that you will be visiting. If not, ask if they have a partner institution in that country where the transaction will cost you less. There are also apps available through some banks where you can locate free ATMs abroad. By finding out, you can hope to eliminate the ATM fees, but may still incur the foreign transaction fee. We suggest that you once again call your financial institution. Kindly ask if they will waive those fees while you’re away. In many cases banks will do so for customers in good standing.
Understanding Dynamic Currency Conversion
What is this? Merchants abroad may ask if they can execute to your purchase in dollars, rather than their local currency, so you can see the exact exchange, and can track the cost of that cappuccino. This service is called dynamic currency conversion, and it has a premium attached. In many cases, businesses will charge you up to 7% to do so.
The Solution: Do not, under any circumstance, allow any merchant to do this. There are a plethora of apps out there that will convert currency in real time so that you can keep track of the dollars that you’re spending while abroad
Other Ideas to Make Your Trip a Smooth One
Take along a spare credit card, and keep it in a safe place. So if you do happen to have your wallet stolen, or lose a card you won’t be as much of a bind while you wait for a replacement.
Tell your bank/credit card company where you’re going. When you’re inquiring about foreign transaction fees and ATMs in your network make sure to inform them of your dates and countries of travel. That way, they won’t mistake your Michelin starred meal in Paris for a fraudulent purchase, and decline your card.
We hope that these easy tips will help to make your next trip abroad a little more effortless, and a bit less costly. Bon Voyage!
If you have some ideas or experiences that you would like to share with us at Point Savvy we would love to hear from you.
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