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Nearly every major U.S. credit card company, with the possible exception of one, charges a two to three percent foreign transaction fee when you use your credit card internalionally. Not until lately, have most credit card companies clearly disclosed those fees in their terms and conditions. Many people received a notice telling of a class action lawsuit settlement regarding these fees earlier this year. Credit card companies are now being required to clearly state foreign and international transaction charges on credit card applications, since the lawsuit has been settled. When you are wondering how much your current credit card company charges on international transactions, call the customer service number to find out, most will inform you that the fee is three percent. Paying an extra three percent on every purchase is very tough on the wallet, however, there are some ways to avoid paying for these charges. The foreign currency rate you will receive from your bank is often significantly better than what you would get at a foreign currency exchange booth. Even though ATM withdrawals are generally free of foreign transaction charges, using your debit card as a credit card comes with some risks. A credit card provides much better fraud protection than a debit card and for this reason using a debit card abroad to make purchases can be risky. If your credit card is used by an unscrupulous merchant to overcharge or for some sort of fraud the charges can be easily contested and your card account will be refunded. When a debit card is used in a fraudulent manner, it will mean an empty bank account and it will take longer for you to see any refunds on the stolen funds. The no fee credit cards offer the best way to avoid paying international transaction fees plus they give the security of a credit card with no added fees. It is important to know how much you will be spending; this is good in everyday living, but it is more important when you are on vacation. Very few people have a very good idea how much cash they'll require while traveling; unless you're the exception and have a fairly precise budget, it's difficult to extract the correct amount in a single transaction. Sometimes it is hard to find a cash machine in many countries, but you have to be careful to not withdraw too large of an amount to protect yourself from being robbed. Converting funds back to your local currency also carries fees in addition to the fees you paid to convert to the foreign currency. You can use the safe alternative of traveler’s checks instead of cash, but there is a fee charged when they are purchased and they are not accepted everywhere. Make sure you know what the terms and conditions are on a credit card you have applied for, if you had been under the impression that it charges no additional fees for foreign purchases. Check the terms of the card before using it, to assure yourself that you can pay off the balance in a hurry if the interest rate is high, so you won’t be paying fees in a different way.
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Alisdair Cosgrove has been writing finance articles for many years and can find more of his work at the UK site CreditCardsWeb.co.uk, offering credit card offers for UK residents and also more information on avoid credit black marks.
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