Best credit cards and debit cards to use when traveling abroad

October 5, 2009 5 Comments »

credit cards for traveling abroadIf you are a frequent traveler or have ever vacationed overseas then you have probably come in contact with foreign exchange fees issued by your bank or credit union. If you are about to embark on an overseas adventure and are doing your homework as to who offers the lowest foreign exchange fees then you may have noticed that this amount varies fairly drastically with each institution.

A recent USA Today article conducted a comprehensive study on just this topic and we’d like to reiterate some of the more noteworthy conclusions they made on BankVibe.

Perhaps one of the most important strategies to remember when spending money overseas is to use plastic! Use credit cards for the big purchases (such as plane tickets, hotels stays, train tickets, etc) and use debit cards for all local cash withdrawals. According to the article you can expect anywhere from 1-3% conversion fees from your local bank when using your credit card(s) and 0-5% ATM fees for withdrawing local cash. They also emphasize the point to avoid using your credit card for cash withdrawals over seas as this may leave you vulnerable to additional fees and charges.

Current foreign exchange charges for some of the major credit card issuers: (according to USA Today)

American Express: 2.7 percent
Bank of America: 3 percent
Barclaycard/Juniper: 2 to 3 percent
Capital One: 0 percent
Citibank/Diners: 3 percent
Diners Club: 3 percent
HSBC: 3% (most)
JP Morgan Chase: 3% (most)
US Bank: 3 percent
USAA: 1 percent
Wells Fargo: 3 percent

Current costs per transaction and exchange surcharges for withdrawing cash from a foreign ATM’s:

Bank of America(a) : $0/0 percent
Bank of America: $5/1 percent
Citibank(b): $0/1 percent
Citibank $1.50/1 percent
JP Morgan Chase: $3/3 percent
US Bank $2/1 percent
USAA: $0/1 percent
Wells Fargo: $5/0 percent

Keep in mind that while some of these banks may claim to have $0 fees for withdrawing foreign funds, these withdrawals must be completed at partner banks. For example, If you have (or open) an account with Bank of America, you can withdraw foreign currencies from ATMs owned by member banks of the “Global ATM Alliance” with no transaction or conversion fee.

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  • http://www.CreditCardChaser.com Credit Card Chaser

    The “partner banks” restriction is an important thing to note as those are easy to overlook amidst all of the other fine print. Great reminder and great tips.

  • zach

    Great post. I have some additional information to offer.

    Capital One also has an Online Money Market account with no minimums. What comes with it is an ATM card (NOT DEBIT) and you are allowed 6 ATM withdrawals per month and there are No foreign fee for the transaction or currency or anything. Just like their credit card. I have this account with them and got it right before I spent a year living in Sweden. It was great, and even has a decent APY too.

    Further my main bank HSBC, when I told them I would be using COne’s money market and and credit card abroad, they actually matched Capital One’s ATM offer. They gave me 6 a month and that included the DEBIT. This came in nice a few times.

  • BankVibe

    Thanks for the input guys! I am looking into the fine print with some of BofA’s partner banks here in Europe. And I will certainly check out Capital One’s online MMA although last time I checked Ally or Discover’s MMA option was slightly more favorable as far as interest rate, fees and minimum balances are concerned…

  • jeremy

    Great timing…I’m headed overseas next month! Here’s a useful site (http://flyerguide.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange#Debit_Card_Transactions). I believe a favorite among seasoned travelers is the Schwab Bank Invest First Visa (no fees, 2% cash back). Unfortunately, it looks like their site is down right now. Check it out! I just got approved!

  • john

    Charles Schwab has a credit card that pays 2% cashback and zero fee for foreign currency transactions.