Don't Get Ripped Off by Your Credit Card on Your Next Vacation
Foreign credit card and ATM fees can add to your vacation costs.
May 18, 2010— -- Traveling overseas can be expensive enough with rising airfares, expensive hotels and fluctuating exchange rates.
But for many travelers there is another hidden expense: credit card fees of up to 3 percent, simply for swiping your card outside the country.
It might only be a dollar here and a dollar there, but on a $4,000 family vacation to Europe those fees would add an extra $120 to the trip's cost.
Using a credit card or withdrawing cash from an ATM usually provides the best exchange rate. But the fees can quickly pile up. Not every bank charges such high fees, leaving it up to travelers to do their homework -- and pick the right card -- well in advance of their trip.
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There are actually two fees charged for using a credit card, and this is where it pays to be a savvy consumer. The first is a 1-percent transaction fee that Visa, MasterCard and other card processors levy to actually convert euros to dollars or pesos to dollars. There is -- almost -- no way to avoid this fee. (We'll tell you the few exceptions in a minute.)
The second fee is the one that can be avoided. This is a fee that individual banks that issue credit cards levy. It can be as high as an additional 2 percent.
"They're charging an extra 2 percent for absolutely no reason whatever, ever, just because they believe they can," said Gary Steiger, who runs the website Free Frequent Flyer Miles, which tracks credit card, banking and mileage program offers.
But some banks don't charge that extra 2-percent fee and a handful go one step further, taking a loss on the 1-percent fee from Visa and MasterCard, giving consumers no foreign transaction fees.
Capital One offers several cards with no such fees, and the Pentagon Federal Credit Union offers the PenFed Promise Card that also doesn't add on fees for foreign purchases.
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