Travel costs – how the right credit card can save you money and headaches

About 90% of all credit cards have foreign transaction fees – find out how to avoid these additional costs, and leave more room in your budget for the things you truly want to do in your travels.

Although 3% may not sound like much, it can add up. Imagine traveling overseas and paying an extra 3% of your total budget, on top of the already steep conversion rates. This is how high international transaction fees are becoming, and if you have one of the 90% of credit cards carrying these rates, your trip could end up costing quite a bit more than you’d planned.

A fast and simple way to find out if your card has these fees is to check on its terms and conditions. Although some larger companies are beginning to eliminate these fees, they are still prevalent, so it is always wise to check.

Many cards have eliminated international transaction fees in the interest of catering to frequent travellers, and tend to carry benefits which fit their lifestyles as well, such as frequent flyer miles and bonus points for travel purchases.

It would be worthwhile to check in to the possibility of applying for another credit card for international use if your current card carries fees. Some cards to consider include the Chase Sapphire Preferred card, BankAmericard Travel Rewards card and the Barclaycard Arrival Plus World Elite MasterCard. Trust us, their list of international fees is shorter than their names…

If you happen to bank with an institution whose cards are backed with a magnetic strip, you may run into problems while in other parts of the world where they’ve converted to EMV technology. In many places, these “smart cards” with embedded identity-verifying microchips are prevalent, and thus it may be wise to consider what types of credit cards are more common in the places to which you intend to travel. However, due to increased globalisation, this is becoming less of a problem, and shouldn’t cause you too much frustration anymore.

Obtaining cash in foreign countries is another story entirely. You may be tempted into exchanging your currency at the airport; however, this is ill advised, as the exchange rate is generally very poor. It would be wiser to utilise a cashpoint if at all possible. According to CardHub’s 2014 Currency Exchange Study, currently, the average charge for currency conversion is 6.73 percent higher with banks, and 10.17 percent higher at Travelex locations, than it is to simply use your credit card – an international transaction fee-free one – to obtain money from a cashpoint. However, be aware of potential foreign cashpoint fees while choosing this option, as some may charge up to $2.78 per transaction, especially if they are not affiliated with your home bank.

See if your bank is part of a Global ATM Alliance. This means they have a no-fee agreement with banks in many countries, which include Australia, Canada, China, England, France, Germany, Italy and Mexico. It is always wise, though, to remember that there may still be foreign transaction fees from your card.

Lastly, no matter what type of card or bank you are using, ensure that you make them aware that you will be traveling out of the country. If you fail to do this, your transactions may look suspicious on your account, which could cause your card to be shut down by the company’s fraud prevention systems. It is also wise to pay off your current card balance before leaving, to avoid the risk of hitting your maximum credit amount while overseas. Pay in local currency and allow your credit card company to do the conversion work for you, because it will allow you the best exchange rates without the headaches.