You will notice that when you use your credit card abroad, you will be charged an international transaction fee.
This is applied to all purchases that you make on the card. It is basically charging you for using the card in another country. So just why are you charged an international transaction fee and what is it?
Understanding the Fee
International transaction fees are there because the bank has to convert the money into the foreign currency. You will find that typically the cost for transactions vary. As a guide, transactions that are converted by
- MasterCard - 2% – 3% of the value of the transaction
- Visa - 2% – 3% of the value of the transaction.
- American Express - 2% – 3% of the value of the transaction.
This may also include a 1% conversion fee too that is charged by MasterCard or Visa.
It is worth noting that if the transaction is paying in Australian dollars to an oversees merchant, the fee will be 2%.
If you are using an American Express card then the fee may be higher again.
You should always compare your different options. Work out whether you would prefer a Visa, MasterCard or American Express. Also think about what you will be using the card for.
Avoiding International Transaction Fees
Another way to avoid transaction fees is to avoid using cash advances. When you withdraw money from a credit card account, not only are you charged the transaction fee, but you are also charged a withdrawal fee too. If you do want to make a cash withdrawal then it is advisable to use a debit card instead.
Credit cards can be cheaper to use rather than travellers cheques, just as long as you use them properly. Compare your different options and see which companies are currently offering great card deals. You will find that some of the cards advertise no international fees. However, if you look closely at the terms and conditions, you will see that there are some fees associate with using the card overseas. Some of the transaction fees may be eliminated but there will still be some fees associated with using the card abroad.
Overall, there are various international transaction fees that you have to think about. Compare your options and avoid cash advances if you want to experience the lowest fees.
Comparison of No International Transaction Fee Credit Cards
International Credit Card with No Foreign Transaction Fees
Bankwest Zero Platinum Credit Card offers zero foreign transaction fees whether the transaction occurs in a foreign currency or Australian currency.
- $0 p.a. annual fee
- 17.99% p.a. on purchases
- 2.99% p.a. for 9 months on balance transfers
- Cash Advance Rate of 21.99% p.a.
- Up to 55 days interest free