When you use a U.S. credit card abroad almost all of the major card companies charge a two to three percent foreign transaction fee. Many credit card companies did not clearly disclose or explain these fees in their terms and conditions until this recent time. Many people received a notice telling of a class action lawsuit settlement regarding these fees earlier this year.
Now that the lawsuit has been settled, credit card companies are required to clearly state foreign and international transaction charges on credit card applications.
When you are wondering how much your current credit card company charges on international transactions, call the customer service number to find out, most will inform you that the fee is three percent. Paying an extra three percent on every purchase can really hurt the wallet, but fortunately, there are a few ways to avoid these charges.
The foreign currency rate you will receive from your bank may be much better than that of a foreign currency exchange booth.
Even though ATM withdrawals are generally free of foreign transaction charges, using your debit card as a credit card comes with some risks. A debit card will be easier to use in a fraudulent manner when making purchases abroad than a credit card; this can be the best reason to use a credit card abroad.
If an unscrupulous merchant overcharged or fraudulently used your credit card, you can easily contest the charges and receive a refund on your credit card account. A debit card used fraudulently will make your bank account disappear and it will be very slow to reappear.
It seems that the best way to pay no international transaction fees is through the use of the credit cards that charge no fees; these no fee credit cards give you security without the added expense.
It is always great to know just how much you will be spending in your day to day life, but it is even better when you are vacationing because ATM fees are charged for each transaction. Most people do not have a very good idea of how much cash they may need to have on hand while traveling; it is difficult to withdraw the correct amount in one single transaction.
A cash machine can be difficult to find in many countries and you have to be careful to refrain from withdrawing too excessive of an amount to avoid the risk of being robbed. You have to pay fees to convert to foreign currency and then you also have to pay fees to convert back to your local currency.
Traveler's checks are a safe alternative to cash but they are not accepted everywhere and there is a fee to purchase them.
When applying for the credit card you believe will not charge any additional fees for foreign purchases, be sure you study the terms and conditions carefully to be absolutely sure the card you are getting is the right card. Check the terms of the card before using it, to assure yourself that you can pay off the balance in a hurry if the interest rate is high, so you won't be paying fees in a different way.
Many people are simply unaware of all the potential charges and penalties that can be incurred by seemingly ordinary credit card use. After all, the credit card terms and conditions are very long and very confusing - how many of us ever actually read these terms or the seemingly endless flow of revisions to the terms that come in the mail?
However, if you are committed to eliminating your debt, then you really need to make sure and avoid the following fees, as they add up quickly and may end up negating your efforts to pay down your balance.
1. The Declined Check Fee (or Declined Payment fee)
This fee is easier to incur than ever, thanks to automatic electronic payments. Even if you use the same bank for your credit card and banking accounts, it's still easy to have this penalty applied if you have recurring payments set up and you keep most of your cash in an interest-bearing savings account. If you do so, be careful to always add cash to your checking account several days before the recurring payment will be charged and also set up overdraft protection that will automatically transfer funds in the event that your checking balance is too low. Such overdraft charges are not cheap, but they are usually less than declined payment fees, and they will save you from incurring a higher credit card interest rate.
2. Annual Membership Fee
There is simply no reason to fork over this annual amount to a credit card company when there are so many cards available that charge no annual fee at all. Even American Express now has a card available with no annual fee.
3. Cash Advance Fees
Nowadays, cash advance fees can run as high as 5% of the transaction or more. You are often far better off juggling your finances so that you use your card to charge items for which you normally pay cash, then take the money you save and use that in place of a cash advance. Doing so can save you hundreds of dollars in fees and interest -- usually, cash advances incur much higher interest rates than purchases too, so the cost is not only in the short term transaction fee but in long term interest payments as well.
4. Over The Credit Limit Fees
This is perhaps the silliest and most annoying fee of all. Imagine charging your customers for doing the very thing you encourage them to do - use your product! Well, that's exactly what most credit card banks do. So if you are anywhere near your credit limit, make sure you either call your bank and request an increased limit (which they often will gladly grant you) or use a different card altogether.
5. Late Payment Fees
You really have to be extra careful with these fees now. Credit card banks will often levy these fees if you are so much as a day late. Worse yet, they will often raise your interest rate as well for one late payment. If you do receive a late charge, always try calling and having it removed. Doing so might save you a chunk of change now and a much larger amount down the road -- by avoiding higher interest rates.
Both Alisdair Cosgrove & Scott Russell are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Alisdair Cosgrove has sinced written about articles on various topics from Auto Insurance, Credit Cards and Insurance Quotes. Alisdair Cosgrove has been writing finance articles for many years and can find more of his work at the UK site CreditCardsWeb.co.uk, offering for UK re. Alisdair Cosgrove's top article generates over 74000 views. to your Favourites.
Scott Russell has sinced written about articles on various topics from Cruises, Birthday Gifts and Credit Cards. Scott Russell is a writer, consultant, and editor of debtconquest.com, where you can find information on eliminating ,. Scott Russell's top article generates over 9900 views. to your Favourites.