Many an overseas trip that started off being planned on a very strict budget with the purchase of cheap airplane tickets and discount hotel rooms or cheap vacation packages ultimately cost more than expected because of unexpected exchange rate charges.
American tourists in foreign countries are often offered the choice of whether to pay credit card charges in U.S. dollars or the local currency. Many opt to be charged in American currency thinking that this will avoid their credit card companys 3 percent (which is pretty standard) foreign transaction fee. If your credit card company charges such a fee, it applies to any purchase made outside the United States, regardless of whether it is in dollars or foreign currency.
Before traveling oversees you should see if any of your current credit cards do not charge overseas transaction fees. If all do, then do a little research online to find a new credit card that does not. Capital One offers several credit cards that do not charge this fee.
Do not assume that because you choose to exchange U.S. dollars at a worldwide recognized institution such as Western Union, that you will automatically be given a competitive exchange rate. It is critical that you ask to read any bank or companys exchange rate terms prior to turning over your money. Western Union has been known to charge commission fees of close to 20 percent when exchanging currency.
Avoid currency exchange storefronts at airports and train stations which usually offer very poor exchange rates, particularly when their commissions are factored in.
Select debit credit cards, including ones offered by Charles Schwab, that provide their members the ability to use their debit cards at foreign bank ATMs to withdraw money in local currency without paying any fees.. Charles Schwab even pays for any ATM fees charged by the local bank.
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