Foreign Exchange is the system by which one currency is exchanged for another, enabling international transactions to take place. A U.S. Dollar credit card will help avoid high exchange rates and currency-conversion fees.
Hidden Charges by International Credit Card Foreign Exchange Though the fees for foreign exchange by U.S. dollar credit cards are now quite transparently listed and disclosed by credit card companies, card issuers prefer to leave hidden charges in the fine print and rarely publicize them. While there have been complaints that the majority of these interchange fees are used to fund credit card reward programs and other direct advertising campaigns rather than to process the actual currency exchange, the real concern is the lack of awareness regarding these fees. Many a time, overseas credit card consumers come home to their shocking billing statement.
The foreign exchange fee for credit card purchases comprises of two parts – the fee percentage that is charged by the card payment network (such as American Express, Master Card, Visa, Discover) and the fee percentage added by the card issuer (such as Bank of America, Citibank, Chase,).
American Express has its own charge of 2per cent for foreign exchange, though it does not impose an extra card issuer fee. A standard 1% fee on all foreign currency charges is imposed by MasterCard and Visa, to cover the expense of converting your foreign currency purchases back into U.S. dollars. Though the fee is imposed on the card issuer, the expense is usually taken from the consumer. Banks and card issuers that issue MasterCard and Visa also put in their own additional transaction fee which usually another 2%. Formerly, the only major card payment network that issued no foreign purchase transaction fees was Discover Card; but now even they have updated their policy and added on these extra charges.
U.S. Dollar Credit Cards not hiking Foreign Exchange fees: Issuers such as Capital One, FleetBoston, MBNA America and Wachovia Bank do not impose extra fees on foreign transactions, as of now.
Neither the nation's credit unions nor most community banks charge these sorts of fees. Capital One credit card is one of the major U.S. dollar credit card issuers that does not charge foreign exchange fee for credit card purchases made abroad. Though Visa and MasterCard still impose fees on Capital One, so as to attract customers, the card issuer has decided to waive the fees. Thus it would be best to apply for a Capital One Visa or MasterCard to avoid the expensive and cumulative foreign exchange fees.
Before using your Credit Card to make foreign purchases: Today, sophisticated transaction software is implemented by modern credit card programs to detect unauthorized credit card activity. For instance, if your card has always been used in your hometown, but credit charges start pouring in from some place like France or Romania, your card issuer may get alert and as part of their anti-fraud measures, start declining those international charges. To prevent such an inconvenience, send an e-mail or make a phone call to your credit card company before you travel.
