![]() On the other hand, electing to use dynamic currency conversion at the point-of-sale system - in other words, paying in your home currency - often gives you a poor conversion rate. So as long as you’re paying with a card that doesn’t add foreign transaction fees, you should get the best possible deal on your purchase, though American Express, Discover, Mastercard and Visa may have slightly different currency conversion rates at the time you make a purchase. Generally, credit card companies will give you close to the true exchange rate. So, if you use your US Mastercard to buy a £50 meal in London and pay in the local currency, you’d be charged $62.24. ![]() Getty Imagesįor example, at the time of writing this article, the Mastercard currency conversion rate for a US card to make a purchase in British pounds is roughly £1.24 to $1. This is called dynamic currency conversion - here’s everything you need to know.ĭecline currency conversion when paying abroadĬhoose the local currency option to save money while traveling. While you might be tempted to choose US dollars for convenience, this often gives you a poor currency conversion rate. When you make a purchase with your credit card or withdraw money from an ATM, you might see the option to be charged in the local currency or US dollars. But there’s another way you could be unknowingly given a terrible exchange rate, even when you pay with a credit card that doesn’t charge foreign transaction fees. You probably know what foreign transaction fees are these are charged when you use certain credit cards to make a purchase in a foreign currency. If you’re traveling this summer, keep an eye out for this sneaky way you can lose money. Enrollment may be required for select American Express benefits and offers. Terms apply to American Express benefits and offers. We may receive a commission through our affiliate partners if you apply and are approved for a product, but our reporting is always independent and objective. International transaction fees can make shopping more expensive than it has to be, but if you know your way, you can outsmart your bank and save yourself a lot of money.CNN Underscored reviews financial products based on their overall value. ![]() Plus, you can make transfers 24/7–on your own schedule, not your bank’s. If they do, you can use OFX to dramatically reduce your international transaction fees and exchange rate margins. Whether booking a hotel or purchasing a luxury item, ask your vendor if they accept payment direct to their bank account. If you don’t have a card that doesn’t charge a fee but you make a lot of international purchases, it would be wise to apply for credit cards that don’t charge these fees.Īvoid high international transaction fees by using OFX to send money rather than using your credit card. Use that card whenever you’re planning on purchasing products from abroad, as well as when you travel. You might have a card that doesn’t charge these fees. There are some ways that you can avoid costly international transaction fees:Ĭheck your credit cards’ terms and conditions. A few ways to avoid international transaction fees ![]() 1 When combined with the fees, you could be paying at least a 6% premium on your purchase by using your credit card. For many cards, this rate is at their sole discretion, and you may not know how big that margin is in advance. ![]() On top of that, most credit cards charge a 3-5% margin on the daily interbank or market exchange rate for the day. For example, if you spend $100 and your fee is 3%, you’ll spend an extra $3, but if you spend $1,000, you’ll be paying an extra $30 in fees. You might be thinking that 3% doesn’t sound too bad, but these fees can quickly add up if you’re making a lot of small purchases or you’re making large purchases. 1% of that fee may go to the payment processor, whether it’s Visa or MasterCard, and the other 2% might go to the bank that issued your credit card, such as Chase or Bank of America. The average international transaction fee will be around 3% for purchases made in US dollars. How much should you expect to pay in fees? In other words, anytime a credit card is used to make a purchase and the transaction needs to be processed into the local currency of the seller, you’ll incur a foreign transaction fee. And while most of these charges are applied to travelers, they can also be added to your credit card bill when you make a purchase online from a foreign vendor. Anyone who’s traveled internationally and used a credit card to buy something knows about those pesky foreign transaction fees that are applied to every purchase.Īn international transaction fee is charged to you, the consumer, by your credit card company whenever you buy something in a foreign currency. ![]()
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