Ease of Travel

You may not know it, but that 5 euro espresso is actually going to cost you more than you anticipated. When you use a domestic credit card for a non-US Dollar purchase, the credit card company is going to charged you anywhere from one to three percent just to convert it into US Dollars. This is on top of whatever you’re getting screwed out of in terms of our horrible exchange rate now. What makes it worse is that when your credit card company is getting charged, it’s already been converted into US Dollars for them. It’s not like you’re paying them to convert euros to dollars, it’s already been done for them. Read on to find out what cards will screw you the least.

If it’s a Visa or MasterCard, Visa and MasterCard itself is charging 1% to the card issuer. For example, let’s say you have the ever popular AT&T Universal Cash Rewards MasterCard (you get 5% back at supermarkets, drugstores, and gas stations) and you charge the equivalent of $100 for something in Europe. Citibank (who is the issuer of the AT&T Universal Cash Rewards MasterCard) is charged $1.00 by MasterCard (1%). So, Citibank (and every other credit card issuer) will pass that 1% onto you and add on an additional one to three percent. So you’ll get dinged for 2% - 4% on top of the original purchase price.

The worst part? They don’t actually list the fee separately; your bill for the $100 purchase will just appear as $104! You’d notice if they were nice round numbers, but they won’t be, so the additional 4% will be nice and hidden. You won’t even know the exact exchange rate either so it’s another layer of complexity.

Here’s a banks that definitely charge and and what they probably charge: (on top of the 1% conglomerate fees)

Bank of America - 2%

Citibank - 2%

Bank One - 2%

First USA - 2%

Chase Manhattan - 2%

Providian - 2%

Wells Fargo - 2%

Starwood Amex - 3%

MBNA America

(updated 4/28/05)

Here’s a list of banks might not charge: (they still pass on the 1% Visa/MasterCard to you though)

Capital One

FleetBoston

Wachovia

American Express

- Most AMEX card will charge you a fee.

Most national credit unions and most smaller banks

Before an international trip, call up your credit card issuer and ask about these additional fees, because things may change over time. Ask for every fee conceivable for an international purchase — then write it down on the back of the card. You want to call before a trip because no one every reads those little booklets they send out with your Cardmember Agreement changes, so they might have changed since the last time you called.

Credit cards are still the best way to pay because you get a will usually get the best exchange rate because Visa/MasterCard uses its negotiating power, something you can’t do as someone walking up to the foreign exchange counter at the airport. You also get the added protection of credit without the surcharges of traveler’s checks.

Update: MBNA has joined the darkside - they now charge 3% plus the 1% Mastercard/Visa charges. (4/28/05)