Going abroad – Worried about overseas charges for credit card usage
This article for all those travel enthusiasts who are planning their dream trip abroad or those excited grooms planning a romantic honeymoon abroad. This article will give you details about credit card charges abroad and how you can be careful not to have your trip of great memories spoilt by the cost of it.
There are generally 4 charges levied on credit cards when used abroad.
1. International card withdrawal fees
This is an additional fee charged when using your international credit card for ATM cash withdrawals. This withdrawal rate will be around 1-2% on the cash withdrawn. This interest will begin the minute the withdrawal is done.
2. Standard cash withdrawal fee
This is a fee that is levied when the credit card is used in ATM to withdraw cash irrespective of it being used in India or abroad. In the case of being used abroad, this fee is added in addition to International card withdrawal fees.
3. Foreign currency conversion
Since your credit card is registered in India its default currency status is Rupee. Thus, when using your card abroad a cross-currency fee is levied for every transaction made abroad. The fee will be between 2.5% – 5%. The rate is applied during the time of repayment i.e. if you do the transaction on 15th of July and you settle on 21st then the rate on 21st will be applied.
4. Foreign transaction fee
This fee is levied by Visa and Mastercard. They are the world's premier and widely used payment network. They act as a conduit between the card issuing bank and the merchant from whom you have purchased the goods or service from. So, when your credit card is used in a foreign country then the payment network charge 1% on the transaction while the card issuer will charge 1% to 3%.
These 4 fees are the ones a person needs to be careful about when it comes to using your credit card. These are the reasons why your credit card charges also vary by 5% to 6% from what you would have calculated.
So, let's see how you can get the better out of these charges.
Avoiding extra travel cost
Know the terms of your card – Know what are the charges that are levied on your credit card transactions especially transactions in foreign countries. If there are a lot of fees get a no foreign transaction fee credit card.
Get a no foreign transaction fee credit card – This will help you avoid those pesky transaction costs. There are credit cards available specially built for travel analyze and subscribe.
Know your bank's connections abroad – Learn the capability or connection of your bank abroad. Check if your bank is part of a global ATM network if so you can get ATM transaction for free or for bare minimum rates.
Always pay in local currency – Avoid dynamic currency conversion by paying for goods and services using your credit card in local currency. Many vendors will suggest they convert the bill into dollars and might quote a lot at a very high conversion rate. Let your bank and payment network sort out the conversion. This will be nil or a bare minimum provided the first 3 points are followed.
The bottom line is that your trip needs to be memorable, you should not worry about spending money and lose all the fun. Due diligence is required i.e. be prepared by covering all your bases. You will pay some fees but with careful planning, it can be pushed to a bare minimum.
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