An International credit card can be a convenient option when making purchases abroad. It’s easy, fast and secure than carrying foreign currency. If you are not careful, you can rack up a lot of unwanted charges. You must know the nitty-gritty on international credit card fees, how you can avoid abusive currency conversions and cut down the costs.
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International Credit Cards
You can use most credit cards overseas when shopping, dining out and more assuming the store or place accepts the card. When you’re abroad, you can use your credit card as you would in your country. You can use your credit card to withdraw cash in ATMs overseas. Make sure to keep your eye out for foreign transaction fees and currency conversion rates.
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The Costs of Using a Credit Card Overseas
Before you travel, take a closer look at the fees your credit card provider may charge. Visit their website or call and reach out to a live agent to find out more.
Foreign Transaction Fees
The main cost of using a credit card abroad is related to non-sterling transaction fees, cash withdrawal fees, currency conversion charges, and interest charges.
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- Non-sterling transaction fees: When you make a purchase, your bank needs to convert it into foreign currency. The costs for this task are covered by a non-sterling transaction fee, which is between 2-3% of each purchase.
- Cash withdrawal fees: Using a foreign ATM can be expensive. Apart from the non-sterling transaction fee, you may also be charged a cash fee when withdrawing money which is between 2-5% for each transaction. The ATM provider may apply additional service charges.
- Exchange rate mark-ups: You can also be subjected to an unfair exchange rate. Most providers take the mid-market rate and apply a margin without informing you. You have no idea how much they are overcharging you.
- Interest charges: Credit card companies can charge you high interest if you don’t pay back your bill.
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Using Credit Cards to Withdraw Cash Overseas
You can use an ATM and make a withdrawal with a credit card. However, this should only be done as a last resort since the additional fees are not worth it. Suppose you withdraw money from a foreign ATM. You could be charged an additional 3% cash fee and the cash machine owner may apply other charges.
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Is it Better to Pay Money in Local Currency?
Whether you’re paying or withdrawing money abroad, you’ll probably be charged a higher exchange rate by the firm handling the transaction. Hence, it’s better to use the local currency when offered a choice.
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Paying for a Holiday using a Credit Card
While using a credit card to pay for your holiday, you may find a surcharge at the checkout. Some other perks your credit card company may award you include cashback, bonuses or points. Keep in mind, to avoid interest charges, you should pay off all of your credit card bills every month.
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Is it worth using a Credit Card when traveling?
Using a credit card to pay for expenses abroad has its pros and cons. Credit cards are convenient and easier.
- If your credit card is stolen, you can report it to the bank which will deactivate the card.
- When using a credit card, you can earn the bonus, cashback or points.
- Credit cards provide insurance on purchases such as expired consumer goods, travel delays, and lost luggage.
- Credit cards carry overseas costs such as non-sterling transaction fees, withdrawal fees, and exchange rate markups.
- You can easily overspend and exceed your spending budget.
- Some banks set daily spending limits, if ignored, it can put you in unwanted situations.
- Credit cards may require ID confirmation. Hence, you will need to carry your passport.
A credit card is a handy solution when traveling abroad. Be sure to explore all other options and educate yourself about international fees and more.