Taking a credit card with you abroad is a good way to spend money, especially if you dislike the idea of carrying wads of cash with you. However, is charging items to your card saving you money abroad? When you use your credit card to pay hotel or restaurant fees, your credit card issuer, be it a credit union or a bank – takes a tidy cut by charging you. One way to avoid this is to apply for a card with a zero fee when it comes to foreign currency transactions. This way, it will be cheaper to use a credit card than your debit card, which may incur you a point of sale fee or withdrawal fee if using an ATM.
There are several credit cards on the Canadian market that will save you some money. First, the BMO US Dollar Mosaik MasterCard is a good option if travelling to the US. Frequent travelers to Canada’s southern neighbor pay in US dollars for US purchases, and on spending $1,000 or more, the annual fee on the card is rebated. Then, the Venture Rewards Credit Card by Capital One is another offer if travelling anywhere else. The card is featured with a rewards program, free flights on any airline, a zero transfer fee, and a zero foreign transaction fee. Special access to events, concierge service, and shopping discounts are among the many perks you will enjoy provided that you have an excellent credit score to be approved.
Even if your card issuer charges a conversion fee, you may be saving money by using your card. Purchases to credit cards are exchanged using the interbank exchange rate, which is in most cases the best rate for currency conversion. While your issuer will charge you a fee every time you use your card, this fee will be lower than what you would pay at a change bureau or for cashing traveler’s checks. Keep in mind that some hotels, stores, and restaurants may not take credit cards, and it is important to have cash on hand while travelling abroad. Getting cash advances should be avoided, with finance charges adding up quickly.
To make sure you will make the most of your credit card, call your issuer and ask about the types of fees applicable to purchases. Inquire about fees in dollars and in the local currency. It is wise to call before each trip abroad because your issuer may change policies without notice. While talking to a bank representative, let them know where and when you will be travelling abroad. In this way, the fraud alert system of the issuer will not be triggered due to international activity on your card account.
Finally, a few words about travelling in Europe. Some merchants feature the so called dynamic currency conversion, meaning that they charge travelers in dollars. Your credit card company may waive the conversion fee if making purchases in dollars. At the same time, merchants will impose a conversion fee, sometimes as high as five percent, and you might end up on the losing side.
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