Sneaky Fees - Save Money on Foreign Exchange Fees!
Finally the summer is upon us and I know many of you are planning foreign vacations, myself included. However, traveling abroad also means preparing money and foreign currency. Unfortunately, the US dollar does not go nearly as far as it used to. When I was last in London a bagel and latte cost me over $16!!! I don’t want to beat around the Bush as to why our currency is devaluing and why the US deficit is growing faster than our girlfriend who just turned 28. But I digress.
The easiest way to travel and make purchases abroad in foreign currency is to not bring foreign currency. Conveniently your credit card can be used in 18 million countries. BUT, for this convenience your credit cad company will be charging you a fee. Banks charge you the wholesale FX (foreign exchange) rate imposed by the network association (such as Visa, Mastercard, or American Express) while adding a mysterious transaction fee to line their own pockets. Banks may add up to 3% “transaction fee” for doing absolutely nothing since the conversion is handled by the network. But consumers are used to this treatment by banks and unless you exchange money beforehand at a bank or use ATMs and pay even more fees, we are stuck with no options (I hope someone from the Senate Committee is reading this). Each bank varies what they charge for this transaction fee. Below is a Foreign Exchange Fee Comparison Chart:
| Bank | Fee |
| Chase | 2% extortion fee plus 1% network fee |
| Bank of America | 2% extortion fee plus 1% network fee |
| Washington Mutual | 1% network fee |
| Citi | 2% extortion fee plus 1% network fee |
| CapitalOne | NO FEE! |
| Discover | NO FEE! |
| American Express | 2% extortion fee |
As you can see the fees vary. Some banks pass on the 1% Visa/Mastercard network charge while others like CapitalOne and Discover do not charge any foreign exchange fees! We should give them an award, but they are still the Devil credit card companies after all.
Here are some recommended cards while traveling abroad to minimize the fees:
Miles by Discover® Card
Discover® Open Road CardTags: Travel, Exchange Rate, Help, Advice, Banks, Credit Cards
Thanks! I was looking for the fees. They’re always hidden. What about ATM fees? Are those the same as credit card fees or vary?
ATM fees vary from credit card foreign exchange fees and are typically higher. This also depends on the network you are using since you can still be using the Visa or Mastercard network or the Cirrus ATM network in North America. Banks will charge a fee varying from $1-$15 per withdrawal and then further % fees. Thus it’s usually better to withdraw large amounts to reduce the % fee. I will write a post soon with more details and a comparison table.
Banks and Money…
I couldn’t understand some parts of this article, but it sounds interesting…