Don’t fall for this expensive and common misconception about credit cards

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International travelers, take note: You may be paying more while traveling abroad.

Many credit cardholders don’t understand their card’s foreign transaction fees, according to two surveys released this week. In fact, they make a few common mistakes.

• More than half — 52% — of people don’t even know if their credit card charges a foreign transaction fee, according to a survey of 400 people by the personal-finance website WalletHub.

• And some 86% of people don’t realize foreign transaction fees can apply both abroad and while the cardholder is in the U.S., making purchases from international merchants.

• And if people were aware of these fees? They’d vote with their wallet. Some 67% of people told WalletHub they’d never get a card that charges a foreign transaction fee.

What are foreign transaction fees?

Credit-card issuers charge them on top of the purchase price when cardholders buy something anywhere outside the U.S., even in Canada or Mexico. They may also apply to purchases made inside the U.S., but through a retailer based outside the country. Foreign transaction fees are often listed separately on your credit-card statement, and they’re typically about 3%.

When consumers are signing up for new cards, they may pay more attention to the rewards than the fine print regarding extra charges, including foreign-transaction fees, said Brian Karimzad, the vice president of research at credit-card website CompareCards.com. For many cardholders, “What you pay when you travel probably isn’t top of mind,” he said. For those who like to travel, it should.

What cards don’t charge foreign transaction fees?

They’re hard to avoid, especially if you don’t think of asking when you’re choosing a credit card. More than half of all credit cards charge a foreign transaction fee, according to a separate analysis on foreign transaction fees released Tuesday from CompareCards.com. And they’re not small either. The average fee cards charge is 2.61% per foreign transaction.

Some cards—including Costco’s Anywhere Visa












V, +0.69%










Chase’s Amazon Prime card












AMZN, -0.41%










American Express’s Hilton Honors card












AXP, -0.86%










and all Capital












COF, -1.20%










 cards—charge no foreign transaction fees and no annual fee. But among those cards that charge an annual fee, but no foreign transaction fee, the average cost was $87 per year.

How do you avoid onerous credit-card fees?

So what should frequent travelers do? Choose a card with no annual fee and no foreign transaction fee, Karimzad said, and use it exclusively while making international purchases. Paying with a credit card is also often less expensive than currency exchange fees, Karimzad said. So credit cards with annual fees, but no foreign transaction fees, can still be a better deal.

Using a card issued by a bank with international branches and ATMs may allow you to withdraw cash with low fees—1% to 3%—or even no fees, according to Nerdwallet. And the larger the amounts you withdraw, and the fewer trips you make to an ATM while on vacation, the better. If at all possible, avoid out-of-network ATM machines or expect to get charged by both banks.



Source : MTV