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Apr
25

Hidden Fees

Hidden Fees

hidden fees

hidden fees

We’re all the same, we struggle to find good travel deals. We browse websites late into the night, we scan blogs, read reviews all in the hope of finding the flight, hotel and itinerary that is just perfect for our budget. What many of us don’t know is just how hard others work to embed fees into services we don’t think about at all until we open the bill and cry. Welcome to the first in our three-part series of hidden fees. First we’re going to tackle foreign transaction fees, something probably very few of you even realize you’re being charged with every time you use your credit card on an overseas trip.

Foreign Transaction Fees

Did you know that every time you use your card to buy something when you’re traveling abroad your bank charges you? Or how about when you’re sitting at home in front of your laptop and you see something from London you just have to have. Yep, they’ll charge you on that one too. Which means that on top of horrible shipping costs you’re going to be charged an extra 3% for a transaction fee on a dress you probably could have found here.  Why do they charge you the 3%? To offset the cost of fraud prevention and currency exchange services, which banks profit from.

But guess what?

You don’t have to pay! That’s right, you don’t have to pay. How?  Not all credit cards are created equal. And you, as the consumer, have the right to choose the card you want to take with you on your vacation.

Common Foreign Transaction Fees

  • Capital One- No Foreign Transaction Fee
  • American Express – 2-3%, depending on member status. 0% for platinum and Centurian
  • Bank of America – 3%
  • Chase – 3%
  • Citibank - 3%
  • HSBC – 3%
  • Wells Fargo – 3%
  • Discover Card – 2% – Accepted in China, the Caribbean, Central America, Mexico and certain parts of Europe.

Something else to keep in mind

You don’t have to leave American soil to incur foreign transaction fees. Some banks charge these fees for purchases made in the U.S. Virgin Islands or the Dominican Republic. Internet transactions processed through overseas companies will also trigger foreign transaction fees. When buying internationally ask whether sales will be processed domestically or through an overseas payment network. The difference can literally break (your) bank.

hidden fees in US Virgin Islands

hidden fees in US Virgin Islands

Another trick: Some foreign retailers offer American shoppers the option to pay for purchases in U.S. dollars instead of in local currency. Sounds good right? Wrong. Choosing to pay in dollars while abroad can lead to double surcharges. Retailers almost always use a conversion ratio far higher than that of credit card companies. So you’re incurring a higher conversion ratio, sometimes as high as 10%, and then you’re also going to get hit with a foreign transaction fee, even though there was no currency conversion processed by the bank.

london shopping hidden fees

london shopping hidden fees

Better Credit Card Options

Let’s face it, using credit cards while traveling is the best way to go. You don’t want to run the risk of carrying large quantities of cash and travelers’s checks can be a pain in the butt, all that waiting, and signing, who has the time? Plus, credit cards convert currency based on the best market price of THAT day, often paying for any transaction fee.

And that brings me back to CHOICE and POWER. You have a little of both.

Choosing the best card to take on your travels:

no hidden fees

no hidden fees

no hidden fees

no hidden fees

Capital One and American Express are the most travel-friendly credit cards especially when combining hotel and airline purchases with rewards programs. Some annual fee cards can pay for themselves through special savings or with an effective emergency card replacement program. Remember to notify your card company before you leave the country, to prevent a “false positive” from the fraud department.

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