One common misconception is that DCC is a good way to get around paying the foreign transaction fees incurred by many credit and debit cards. The service is often touted as a convenience to customers by allowing them to see exactly what they’re paying at the time of the transaction rather than having to wait for the charge to post online or show up in a monthly credit card statement, but many experts feel that it is simply another way for banks and merchants to charge additional fees to unsuspecting customers. With DCC, merchants or banks can process a transaction either in the customer’s home currency or the local currency where the transaction is taking place for an additional fee. "Try to plan your total local currency needs and withdraw the funds from an ATM in as few transactions as possible, so you reduce the foreign bank servicing fees," says Stefan Ross, vice president of credit card products at Fidelity.Īnother more controversial option for making purchases when traveling is Dynamic Currency Conversion (DCC). Planning withdrawals in advance can help you minimize any fees that could be charged. That's because some debit card providers don't charge fees for using foreign ATMs-and a few may even reimburse fees charged by the foreign bank. So, researching when and how you will be charged fees can pay off. If you travel often and don't already have a no foreign transaction fee credit card, you may want to consider applying for one.Taking money out of an ATM in a foreign country typically incurs a fee from both the local bank that owns the ATM and your bank at home. Apply for a card with no foreign transaction fees You can also convert currency at the airport should you need some last-minute funds, but remember that some airports charge a higher percentage for currency exchange. You can convert the money at your home bank or order the currency online and take it with you. Get an idea of how much cash you'll need before your trip. But also, you might find yourself in a location where credit cards aren't widely accepted. You may not want to walk around an unfamiliar place with a ton of cash. If you opt to pay with the local currency, your bank will deal with the conversion and likely give you a better rate. This practice is called dynamic currency conversion. If you choose USD, the merchant decides the exchange rate, which could be inflated. That way, you're able to pay for everything using the local currency, without having to worry about vendors along your trip not accepting USD. Choosing the local currency may be the better move here. If you're using your credit card for a purchase in another country, you may be asked if you'd like to use USD or the local currency. But there are other ways to get around added fees while traveling. The easiest way to avoid foreign transaction fees is to get a credit card that doesn't apply them, if you don't already have one. But there are issuers that do not impose foreign transaction fees on the cardmember as well. It also includes websites based outside of the U.S.įoreign transaction fees typically range from one to three percent on average. This isn't just limited to brick-and-mortar locations abroad. What is a foreign transaction fee?Ī foreign transaction fee is a charge assessed by your credit card issuer on transactions made in any currency other than U.S. Foreign transaction fees, also called foreign purchase transaction fees or foreign currency transaction fees, are important to consider when using any form of electronic payment while traveling abroad.
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