Overseas trip? Save up to 15%
A new study says you can save big on currency exchanges by using a no-international-fee credit card.
This post comes from Odysseas Papadimitriou of Card Hub.
Overseas travel is expensive, especially now considering that the price of jet fuel is up 40.5% from a year ago, according to the International Air Traffic Association, and the dollar-to-euro exchange rate has exceeded 1.4 since mid-March. Consumers therefore need to find deals wherever possible, and this starts with the very money they use to travel.
So where can you find the best currency exchange rate?
According to a recent Card Hub study -- which analyzed the dollar-to-euro exchange rates offered by Visa and MasterCard, 15 of the largest U.S. banks and Travelex, the world's leading airport currency exchange operator -- credit cards can save international travelers up to about 15% on currency conversion.
More specifically, no-international-fee credit cards on the MasterCard and Visa networks offer exchange rates that average 14.7% less than the rates available at airports and 7.9% less than those provided by the major banks. Even if a traveler uses one of the 90.2% of credit cards that charge 3% fees for foreign use, he or she will still save an average of 4.9% and 11.7% compared with banks and airport services, respectively.
How does one take advantage of these savings? Well, it's important to not only get a no- international-fee credit card but to do so even before booking a trip. The fees for international use that are likely associated with the credit card in your wallet apply not only to purchases made in other countries but also to those processed outside the U.S. Thus, any flights or hotels booked through foreign-based companies are likely to cost 3% more than they truly should. Remember to also notify your card issuer of your travel plans so your account won't be suspended due to suspicious use.
Once overseas it is important that you decline any merchant's offer to charge you in terms of dollars rather than the local monetary system. Retailers use this little trick, known as dynamic currency conversion, as an excuse to charge extremely high conversion rates and line their pockets. Luckily, avoiding it is as simple as only signing credit card receipts expressed in the local currency. Post continues after video.
What about cash?
Cash will also be needed to pay for cabs, buses and trains as well as goods at some stores, so you either need to buy some foreign currency shortly before departing or, even better, take a debit card that has low international fees with you. The debit card route will be cheaper since the exchange rate that applies will be Visa's or MasterCard's, not that set by the bank that issued the card.
If you do choose to exchange cash before leaving, make sure to use a bank, as bank exchange rates average 8% less than those charged by the currency exchange services typically found in airports. It is important that you price out a few banks and not merely patron your own given the 11.9% price differential the Card Hub study found between the best and worst banks for currency exchange. In doing so, remember to ask about any fees for noncustomers or delivery.
Overseas travel is expensive, yes, but why pay 15% more than is necessary? As long as you spend your money strategically, you'll be able to both keep your trip's tab relatively low and avoid any surprises on your credit card statement. By using a credit card you will also be protected against liability for unauthorized charges and will have an ally should trouble befall you during the course of your travels.
Credit card companies tend to be pretty good about helping customers traveling internationally with whatever issues they encounter, so just make sure to get your card issuer's collect number before you leave, and you'll be all set.
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