December 8, 2010
'Tis the season to be holidaying! If you have plans to travel overseas and considering using your credit card, have you thought about the costs involved? While credit cards are extremely handy to use when overseas, if you don't use them properly it can end up costing you a fortune.
Costs to use your card abroad
RateCity found that out of more than 250 credit cards that can be used overseas, you can be charged up to $5 or up to 3.65 percent (usually whatever is higher) to withdraw cash from an ATM in another country. You may also be charged up to 5 percent in foreign currency conversion fees. This means just to withdraw $200 you could pay over $17 in fees.
Making purchases is no cheap feat either, and can cost you up to 3.65 percent in foreign currency conversion fees. For instance, you may have to pay up to $14.60 on an item worth $400 when using your credit card in a retail store.
How to keep costs down
Make a few purchases or some cash withdrawals and these fees can quickly add up. The good news, however, is that there are ways to reduce your credit card costs while on holidays:
- Find a credit card that charges less in fees and in interest before you leave. Compare credit cards online to see how credit cards weight up against each other.
- Pre-purchase as much as you can before you leave, to avoid being hit with exorbitant fees once you arrive such as hotels and tours.
- Use cash when you can and only use your credit card for emergencies or when you run out of money.
- Avoid making cash withdrawals with your credit card as not only will you be charged interest immediately but you may also be hit with currency conversion and transaction fees.
- If you are away for a while, don't forget to pay your credit card bill to avoid paying interest. Setup online banking before you depart so you can pay your bill conveniently over the internet.
- Specific rates and fees while travelling overseas will vary so check with your credit card provider before you leave. While the fees and charges are high, you can still keep them to a minimum if you use your credit cards wisely.