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Don't Pay Transaction Fees While Traveling Abroad

Credit cards and ATMs make life much easier when you're traveling abroad. Pay as you go, and have a record of your withdrawals while you're at it, to boot. No matter where you travel, there will be a cash point that makes it convenient to get cash in the local currency. Plus, more merchants now take credit cards than before, making credit transactions while traveling more common. Gone are the days when international travelers had to rely on traveler's checks, thank goodness.

 

 

 

The downside of convenience

But it's not all roses and rainbows when it comes to using a credit card to get cash (or make purchases) while on holiday. In fact, once you return from your trip and view your card statement, you might be in for a rather unpleasant surprise. That's because transaction fees when traveling abroad can really add up, as reported on a handy chart published by Bankrate. Whether you use your credit card to directly make a purchase or use your debit card to withdraw cash, or even your credit card to get a cash advance, it's risky business when it comes to fees. Take, for example, American Express, which charges a hefty 2.7% on foreign transaction fees. That's bad, but not as bad as Chase's 3% fee, which is a combination of their own fee of 2% plus a Master Card/Visa fee of 1%. Think of it this way: if you spend £600 while traveling, you'll get hit with £18 in fees alone. And that's for making purchases. Accessing cash at a cash point in a foreign country with your debit card means you'll get hit with those fees plus a per-transaction fee of up to £3.20, in many cases.

So many fees...what can you do?

Currency conversion fees, foreign ATM fees, cash withdrawal fees, credit card cash advance fees...how can a traveler get by without being struck by fees at every turn? Of course you can apply for no-foreign transaction fees credit cards, which do exist. However, many credit card issuers save the no-fee cards for their premium members. American Express, for example, waives foreign transaction fees on its Platinum and Centurion cardholders.

Obstacles for people with bad credit or no credit

The problem with the solution above is that many people simply don't have access to these higher quality cards because they have no credit or bad credit. What's more, if they do manage to get a credit card under these circumstances, the terms are often very bad... high interest rates, etc. The good news is, it's totally possible to win when it comes to foreign transaction fees credit cards, no matter what your credit rating may be. We'll show you how, below.

Avoiding foreign transaction fees

The simplest way to avoid these fees at the ATM is to travel with a pre-paid travel money card. Here's why:

  • They work like credit cards (they have a Master Card logo on them so they're accepted everywhere Master Card is accepted).
  • There are no foreign transaction fees on pre-paid cards when the transaction is made "in-currency", which means when the withdrawal currency matches the currency of the issued card.
  • In-currency ATM withdrawal is only £1.
  • Even people with a bad credit history can still get a pre-paid travel card. That's because pre-paid travel money cards aren't credit cards. They may look like credit cards because of the Master Card logo on them, and you may use them as if you were using a credit card, but it's really just pre-paid money you've had converted to plastic form for the convenience and safety for traveling.

Pre-paid travel cards are easy to get, easy to load with money, easy to use, and easy to reload when you need more money- topping up can even be done on the go anywhere you have access to the internet. Connect your existing debit card to your pre-paid card and transfer funds when your card runs low. The funds will be available within minutes. Cash withdrawal, when you need it, is a simple flat fee of £1 - make the most of those cash withdrawals by planning your cash needs, and you'll be seeing minimal fees. Best of all, there are no foreign transaction fees, saving you up to 3% on your purchases while traveling, compared to credit cards like the ones listed above. Foreign transaction fees are levied by the card issuers (i.e. banks), so in theory they don't even have to exist. They are simply a way of making a profit. Issuers of pre paid travel cards have chosen to forgo this avenue of profiteering in order to issue a card that's affordable for travelers.

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