Tip for First Time Travelers: Advice on credit cards before you buy ANYTHING, including airfare

"shocked to see a $50-ish something "foreign transaction fee"

THAT'S interesting because I've never seen a separate itemized line for that - it's usually just part of the posted exchange rate.

And it's fairly easy to check the exchange rate difference between with FTF and without FTF, here:

https://usa.visa.com/support/consumer/travel-support/exchange-rate-calculator.html
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EDITED out.

you can also get debit cards with no foreign transaction fees - I have both Cap One and USAA.

Foreign transaction fees can certainly add up, and the two separate Credit Unions we’d used over the years both charged fees, so we used credit and debit cards from other banks. It’s good advice to shop around for means of payment, before shopping for travel!

@periscope — I’ve noticed it at least 3 times so far on my purchases made online. I don’t recall if the train tickets I purchased through Thalys had that separate charge. I bank with Chase.

My Condor flight is a US arrival, Germany departure.

We have a credit union visa with no foreign transaction fees and a Citicorp Costco visa also with no fees and 3% cash back on travel restaurant cards. Really adds up on your costs and airfare. We also use our credit union debit for atms.

If you bought a one-way ticket for a flight from Germany to the US. it would have been priced in EUR, since that is the point of origin. They may have offered you a price in USD, but that is just DCC (dynamic currency conversion), and you would still have to pay the foreign transaction fee charged by your bank.

@Sam - I am new to this, but my understanding is that foreign transaction fees vary from bank to bank? Are they the same as "international fees"? If so, I have opted to get a credit card through a credit union that has no international/foreign transaction fee.

When you purchased your Condor ticket, in Euro, did the website ask you if you wanted to be charged in US$ when you were completing your transaction?

I've never heard of an "international fee." I'm pretty sure that the longstanding, established term (at least among banks and other financial institutions) is "foreign transaction fee" aka "FTF".

Chase breaks out foreign transaction fees on my statements. I rarely see one, because I make a point of only bringing zero-FTF cards with me when I travel, but occasionally I've slipped up and paid for something online with a card that does charge FTF; if that's a foreign business, it'll usually trigger the FTF. Lesson learned.

There's little excuse for this unless you're just not paying attention (but that does happen). There are plenty of cards out there with zero FTF.

FTFs are typically a straight 3%, so not exactly a big deal if you're just buying a gelato (you may annoy the shop owner if you're using a credit card at all for such a small purchase); but if you're paying for an airline ticket, a hotel bill, or (god forbid this year) a rental car for a couple weeks, that FTF will hurt.

Hi Karina! I too, many years ago, experienced the itemized foreign exchange fees on my credit cards statements. I quickly signed on with institutions that do not charge these fees and who will also reimburse fees passed along by foreign ATMs. As you’ve noticed things can get pricey. Very happy that you’ve already found solutions so I will not bore you with recommendations.

Additionally, when completing transactions internationally make sure that the merchant is charging you in their local currency. If you opt (mistakenly) to be charged in U.S. currency you will initiate what’s called Dynamic Currency Conversion. This is not itemized or reimbursed by financial institutions. AVOID!

“Dynamic currency conversion (DCC) is a credit card feature that allows you to make a point-of-sale (POS) credit card purchase in a foreign country using the currency of your home country; it is also known as cardholder preferred currency (CPC). While this makes it easier to understand the price you are paying—and lets you avoid doing the currency conversion math—the service often comes with a poor exchange rate and other fees that can make the transaction more expensive than if you simply made it in local currency in the first place.” (Investopidia.com)

@David - exactly. It's something I wish I had known before purchasing our airfare, but it's a small price to pay, and now I know for the future, and now the rest of the purchases on our trip. I will finalize payment for our (yes, ungodly) car rental with it, as well. Thanks for the reminder.

@periscope - I don't think Condor asked if I wanted to pay in dollars, but it's been several months since I booked. If I was going to bet either way, I would say it was in Euros, because I recall comparing how much our Delta tickets had cost in USD and reminding myself that the Condor ticket was in Euros, so I need to adjust the rate, for comparison's sake.

The references above to Dynamic Currency Conversion (DCC) are spot-on and absolutely worth learning and knowing about and most of all, watching carefully for -- DCC has been sneaked into everything, from restaurants and gas stations to ATMs.

The only point mentioned above about DCC that I'd take issue with is calling it a "service". It is a scam, pure and simple, for those who get fooled into using it. You are supposed to be presented with it as an option and you should always be able to say NO (or HELL NO), but I've had it simply "done to me" automatically, without ever being presented with a choice (I know because I was watching carefully). It's only a "service" to those unscrupulous businesses that shove it down your throat.

Always, ALWAYS, ALWAYS!!! pay in the local currency.

Karina, all of us learn some lessons the hard way. It was kind of you to want to help others.

An international traveler wants a credit card with no foreign transaction fees and an ATM card with no foreign transaction fees or ATM fees.

I use Chase Sapphire Reserve for my credit card because of the insurance it provides as well as lounge access. I use Charles Schwab investor checking for ATM. I have been pleased with both.

"Chase Sapphire Reserve"

Is that the card that comes with a $550 annual fee?

Periscope, yes. But that $550 is just the "sticker" price. A cardholder gets a direct $300 credit on travel every year. Now we are down to $250. For that $250 there is good travel insurance, rental car insurance, some lounge access or free meals at airports, and you earn points that can either be transferred to frequent flier programs or redeemed for cash. I have always earned hundreds of dollars of additional value from my card. For me, this card has been an excellent value.

"Chase Sapphire Reserve" Is that the card that comes with a $550 annual fee?

There are dozens of great and/or expensive travel-specific, premium credit cards. There are also several sites that carefully (and seemingly honestly) review and evaluate them all for their features, perks, privileges, costs, and mileage/cash bonuses.

I've researched premium travel cards carefully but I do not travel enough (not yet, anyway) to rationalize the extra expense. However, the perks may just turn out to be worth the money. I'll need to run the numbers again as I get ready for next spring's Rick Steves Tour. I currently use a simple debit card with Schwab that has zero international fees.

Yeah, I just use simple, no annual fee cards - my daily driver card earns travel points and offers rental car insurance while the other offers zero FTF fees. I fly BC which gives me lounge access both here and at Air Canada / Lufthansa lounges in Europe. For me, I just find the premium card fees to be excessive even though I'm in Europe 6-8 weeks a year.

THAT'S interesting because I've never seen a separate itemized line for that - it's usually just part of the posted exchange rate.

A number of years ago, credit card companies used to bury the fee in the foreign exchange rate. They are now required to itemize it separately (at least in the U.S.). Before this happened, I think many travelers had no idea that this fee was even being charged.

The Chase Sapphire Reserve card also reimburses you for the global entry fee every 5 or perhaps 4 years. But to me the capability to transfer points to partners is quite valuable. If I need say 5,000 miles to get a biz class award seat I can move some CSR points over. 1 CSR point equals 1 mile or 1 cent if I wanted to take cash. So the 5,000 miles costs me $50 or so. Chase does have limited transfer partners.

As someone who travels infrequently, all of this talk of travel perks on cards that charge annual fees is something I tend to shut my brain off to. This is probably why I didn't heed advice to look into these foreign transaction fees to begin with.

What I wanted to express is that most banks out there are charging you extra "foreign transaction" or "international" fees, but there's a simple, no commitment solution to that:

What I hoped to express in this post is that, as long as your credit is decent, open a credit card without an annual fee that will wave international or foreign transaction fees, which charge you up to 3% on everything you buy internationally (including any purchase of airfare with foreign companies). You can tuck it away until the next time you travel internationally. There's options out there that have zero commitment to keep a certain amount of money in an account, there's no commitment to spend x amount every year on travel, no monthly or annual fees. This is a SIMPLE solution for everyone, both new travelers and infrequent travelers.

It's super basic and easy, even for those of us who don't yet have the means to travel yearly.

karina303, a good message for beginning travelers! Although I now play the miles game (although at a lower level than some), I did not start there and it is a good message that you don’t need to in order to travel wisely. As you say, a credit card that does not charge fees is a good beginning! And same with a debit card.

karina303, so, exactly what percentage was the fee on your purchase (maybe I missed that)? My bank charges 2% for foreign transactions. On the other hand, they also have a page on their CC website suggesting you avoid DCC.

@David, I think there are in fact a lot of people who are willing to pay for the "service". I've known several who will pick DCC just so they know in "real money - USD" exactly how much that hotel room cost, regardless of the facts. Over the years, whenever I hear someone say they're "not good at math" (like they're bragging), I tell them they're just going to be paying people who are good at math to do it for them.

@stan — 3% foreign transaction fee on my Chase Freedom card.