Currency conversion may seem trivial in the short term. Most credit cards charge about 3% (so that's 30 cents on a $10 meal). However, if you are traveling long term; it is significant. A 6 month $15000 trip would amount to $450 worth of currency conversion fees. A few ways to avoid this are:
1. Airline Credit Cards: Most airline credit cards do not have foreign conversion fees. Getting a visa card from these airlines is the best bet as visa is accepted the most worldwide. Another card is the City Thank You Premier Card.
2. If you have a friend living in the visiting country, or you have a bank account there; you can transfer money for very little conversion fees through a company called TransferWise. They charge only 0.5% fees for amounts over 1000 pounds; and 1% for amounts below. They are able to achieve these rates because they transfer within countries instead of doing intra-country transfer.
3. Use Charles Schwab and Capital One 360 banks as they do not charge ATM fees when you withdraw money in a foreign account.
Posted by
Lakewood, Colorado
19283 posts
As for #1, credit cards, my experience and research has shown that, particularly in Germany, places that take credit cards are more expensive (by a lot more than 3%) to start with. You're far better off to get an ATM/debit card with a low or no percentage and pay with cash at less expensive places.
The one airline credit card I had charged an annual fee that was far more than I saved on POS purchases in Europe.
Posted by
Tresana, Highlands Ranch, CO, USA
23642 posts
There are dozens of cards both debit and credit that do not charge conversion fees. Just look around. When I use my credit union debit cards my fees are less than one percent so no need for transfer service. Many credit unions have similar fee structure. We tend to use a lot of cash so credit card fees are less important to us.
Posted by
Oak Park, Illinois
4535 posts
A 6 month trip? Other than those studying abroad (not the market for RS), how many people really take 6 month trips to Europe? Schengen only allows 3 months, though you can spend other time in the non-Schengen zone.
More relevant are frequent foreign travelers. But they mostly already know the tricks for saving money and traveling efficiently.
I know there is an obsession here about opening new bank and credit card accounts to save the foreign transaction fees. And it's fine to let people know that is an option. But for someone spending a few thousand dollars in Europe on a 2 week vacation they take maybe once every 5-10 years - it seems like a waste of time and effort.
Posted by
Lakewood, Colorado
19283 posts
"Most airline credit cards do not have foreign conversion fees."
I think this is about to change. The reason the card issuers waive the foreign conversion fees is to encourage you to use the card, for which the issuer gets an "interchange fee" of about 4% from the merchant. However, the EU Parliament has moved to cap these fees on credit cards at about 3/10%, so I expect in the future that the card companies will go back to getting their money from the purchaser in the form of conversion fees.
Posted by
2545 posts
Saving money allows me more and longer vacations. One small way is through a debit/ATM card with no fees and rebates of ATM fees in my possession. I use it often, so not just for international trips.