The Costs of Using Your Credit Cards Overseas

There are some important benefits to using credit cards when you travel overseas. For example, they can let you earn rewards on large expenses (like booking your transportation or hotel room). They can also offer greater security than cash and other payment options.

That said, credit cards also can cost more than you think if you use them overseas. To make sure you’re not surprised by the cost of using your cards when you travel, let’s look at some of the most common fees you might come across and how you can save some money.

Foreign Transaction Fees

One of the most important fees to familiarise yourself with is the foreign transaction fee (also known as a currency conversion fee). This is charged any time you use your credit card to make a purchase overseas, either while travelling or by ordering something online from a foreign destination using a different currency.

A foreign transaction fee is often a percentage of the purchase price, and it combines the fee charged by the credit card company (such as Visa or MasterCard) with the fee charged by the issuing bank. It isn’t uncommon for those foreign transaction fees to equal 2-3% of your purchase price.

Other Credit Card Fees When You’re Overseas

Another time you might be charged high fees using your credit card internationally is when you visit an overseas ATM for a cash advance. Some issuing banks only charge you one fee, while others charge two.

First, you might have to pay an international ATM fee to your issuing bank — usually a small set dollar amount. Then, you might also have to pay a currency conversion fee which can be a percentage of your withdrawal amount. Some banks only charge one or the other — a set dollar amount or a percentage — and some charge both. And of course, if you use a bank outside of your network you may have to pay that bank’s ATM fee as well.

How to Minimise Overseas Credit Card Fees

 It can sound pretty expensive to use your credit card overseas. But there are ways you can minimise those costs. For example, some credit cards (usually elite cards) don’t charge foreign transaction fees. If you’re a frequent traveller, look for one of these offers to save the most money.

Another way you can save is to limit your ATM usage. First check with your issuing bank and find out if there are any free ATMs in their network at your destination. Even if those ATMs are a little out of your way, it can be worthwhile to stop there once or twice to withdraw the cash you’ll need for the duration of your trip.

You can always leave excess cash in a hotel safe for increased security instead of hitting several more expensive ATMs on a day to day basis. With a little pre-trip planning, using your credit cards doesn’t have to be too expensive when you travel abroad.

About the author

Roland Bleyer

Roland has years of experience in the financial industry and is the founder of the Credit World group. He has overseen Credit World grow to become the number one reseller of retail banking products. He is a regular contributor to this blog and and aims to help people make the most of their money and help the consumer find the best possible product. Roland dedicates his time writing finance articles to provide people with information they need. You can find him on Google+ & twitter