|
How Credit, Debit, and ATM Cards Work Overseas, and Which Accounts Charge the Lowest Fees!!! 
Where you can get hit with fees ! For any given transaction, there are four possible places where you can get hit for fees: - By the merchant/ATM-owner
- By the network (Visa/MC/AmEx)
- By the card-issuing bank (Bank of America, Citi, Chase, etc...)
- By whoever calculates the actual exchange rate underlying everything
A note on dynamic currency conversion ! Many merchants overseas have the ability to convert your purchase to the currency of the card's country of issue for you before charging it to your credit card. If a merchant offers this "service," you should almost always decline it, since the rates of conversion used are frequently much worse than any fees you'd incur for having the charge run in the local currency. Examples of rates up to 6.5% worse than those subsequently charged by the card company have been seen. Some merchants (particularly higher end restaurants and merchants in more-developed parts of Asia and Europe) may even convert your purchase without asking you. Always check your receipt, and if you see anything involving your home currency in a country that doesn't use that currency, ask the merchant to re-do the transaction in the local currency. In some cases, the merchant may claim that their credit card terminal automatically does the conversion, but Visa/MC merchant agreements generally require the merchant to offer transactions in local currency. Visa's spokeswoman has been quoted in the media saying that Visa "requires the merchant to disclose the fee and must provide the consumer with a choice" of getting the bill in dollars or the local currency. Note that this can also happen when the billing currency of the card is the same as the country where the card is being used. For example, a UK-issued EUR-denominated card is automatically charged in GBP when DCC is applied by a merchant in the Eurozone. There is an electronic identifier on each card showing the country of issue (as opposed to the card's billing currency) and it is this identifier that DCC uses. Credit/charge cards Traditional credit/charge cards are cards that are NOT linked to a bank account, but that instead charge against a credit line. - For most transactions in foreign currency on a US-issued card, the Network (i.e. Visa/MC) will tack on a 1% charge. A few banks/card-issuers "eat" the fee (notably CapitalOne). Most pass it on either as a line item on your statement or "built in" to the exchange rate. Discover does not charge a fee, and American Express card fees depend on who issues the card.
- In addition, many common US issuing banks (Citi, Chase, Bank of America, etc.) will tack on an additional 2% on top of whatever the network charges (for a total fee of 3%). AmEx cards issued directly by American Express have a 2.73% total fee for UK-issued cards and a 2% to 2.5% total fee for US-issued cards. US-issued AmEx cards issued by other banks (Bank of America, USAA, Citi, etc.) work according to that bank's policies. USAA reportedly charges only 1% total, while Citi reportedly charges 3% total on their AmEx cards (just like their Visa/MC cards). A few US card issuers charge nothing other than the 1% Visa/MC fee, and a very few (notably CapitalOne) even eat the Visa/MC 1% for a total fee of 0%. See the list below for full details on bank fees.
- Even for US-issued USD-billed cards, for some USD-denominated transactions overseas, Visa/MC may charge up to 1%.
- Most UK card issuers add 2.75% with only a handful of exceptions, such as Nationwide.
- Last, there is the issue of the exchange rate itself. Unfortunately, that's not really something we seem to be able to control, but in general Visa/MC cards seem to get slightly better exchange rates than AmEx (although in recent years the difference has been shrinking).
ATM (Automated Teller Machine) transactions Issues involving ATM transactions: - If you withdraw from an ATM using a credit card (i.e., a card NOT linked to a bank account), you will typically be hit with a 3% cash advance fee (for US-issued cards) or a 1.5% cash advance fee min £1.50 (for UK cards) on top of whatever forex fees your credit card already charges you (see above). Some card issuers both in the US and UK (Citi is one) will also start charging interest on your cash advance the second you pull money from an ATM (i.e., they won't give you a grace period). So, unless your card issuer does not charge such a fee, stay away from credit card cash advances overseas.
- Note that some credit card issuers may allow you to avoid paying interest on cash advances if you have a credit balance in your account (i.e., you send in a payment before you make the cash advance). This will not exempt you from cash advance fees, however.
- If you want to use your ATM card overseas, first you have to make sure it has a Visa, Mastercard, Cirrus, or Plus logo on it. Most other ATM networks (NYCE, Star, MAC, Shazam, etc.) are regional and will not work across the globe. For a complete list of interbank networks, visit http://en.wikipedia.org/wiki/Interbank_network
- Note that the ATM card doesn't need to be a Visa/MC debit card. You may find Visa/MC debit cards more widely accepted at ATMs than Cirrus/Plus, but you may be more likely to avoid the US Visa/MC 1% racket by using a Cirrus/Plus card without a Visa/MC logo.
- When using an ATM, you may get hit with an ATM owner fee, but outside North America, ATM owner fees are exceedingly uncommon at bank ATMs. You mainly need to watch out for ATM owner fees at private ATMs inside shops, convenience stores, etc.
- When using an overseas ATM with a US-issued card, you will likely get hit with a fee by your OWN bank if it's a big national bank. Citi, Chase, Wells Fargo, Bank of America, Wachovia, etc. all typically charge their customers $1-10 for each non-affiliated foreign ATM transaction (in addition to any Visa/MC 1% conversion fee). Some premium customers might be exempted from those fees, but check with your bank. Many smaller regional and internet-based banks do not charge anything for foreign ATM withdrawals. See the List below for examples.
- Customers of Bank of America (US), Barclays (UK), BNP Paribas (France), China Construction Bank (China), Deutsche Bank (Germany), Santander Serfin (Mexico), Scotiabank (Canada) and Westpac (Australia and New Zealand) may all use each other's ATMs without fees, except for any FX conversion fee imposed by the card issuer.
- Prior to travel, verify that your financial institution participates in all the networks listed on the back of the card. One user reports that when he went overseas recently, he obtained a cash card from a credit union to avoid fees. Even though it had a "Plus" logo on the card, however, he could not withdraw cash because the credit union had recently terminated its relationship with the Plus network.
- It is also a good idea to carry ATM cards for more than one bank just in case there is a problem with one. In the spring of 2006, for example, Commerce Bank (of NJ/NY/FL) ATM cards (which are usually reliable overseas) did not work in China, but other ATM cards did. Some cards also may work at certain local banks' ATMs, but not at others. One should never rely on a single method of obtaining cash overseas.
Debit card transactions Debit card transactions are purchases with cards that ARE linked directly to a bank account and immediately withdraw the purchase amount from the account. - PIN-based networks do exist overseas, particularly in the UK and Ireland, which mandated "Chip and PIN" for all new cards as of February 2006. Many Europeans use "Maestro" or "Visa Electron" cards that work similarly to US debit cards. But most US-issued debit cards will not work with these networks, so you should not expect to make PIN-based transactions overseas with your US-based debit card.
- Most US-issued Visa/MC debit cards can only be used in "credit card" mode (i.e., swipe-and-sign), but keep in mind two things when doing this:
- The Visa/MC 1% (for US-issued cards) and your bank's 1-3% extra fees (if your bank charges them) will still apply.
- When traveling, it's usually better to use a credit card, since if it gets stolen you simply have to dispute the charges, while if a debit card is stolen you may find your bank account totally cleaned out or overdrawn.
The List !!! The charts below are a compilation of data culled from Flyertalk.com threads and by word of mouth of users of the accounts. The information may contain errors. Flyertalk.com, Flyerguide.com and the authors of this page make no warranty as to the accuracy of this information. Please check with your bank before using your card overseas, and if you find our information is in error, please let us know or edit the page yourself (it is a wiki, after all). If no chart are visible click here for full charts   
Use this template for any additional information you need such as products, pictures, fan clubs, links or just more information. Custom pages can be used for any kind of content and are a great way to add information to your site.
|
