Do credit cards have good exchange rates?
“The reason you get a favorable exchange rate with a credit card is the issuer is operating at much more scale and they're able to do a large volume of transactions,” said Greg McBride, the chief financial analyst at Bankrate, a personal finance site.
Best: Use a debit card at an ATM
Your best chance to get money at a great exchange rate, with no extra fees, is to draw cash from your account through an ATM operated by your own bank or its partners. For example, Citibank allows customers fee-free use of its ATMs in 20 countries.
If you choose to pay in local currency...
Your credit card provider will use a conversion rate offered by Visa, Mastercard or American Express. This will usually be better than the rate you would get from the retailer or ATM.
Currency conversion fees are charged by a credit card's processor, i.e. Visa, Mastercard, or American Express. These fees are typically around 0.25%–0.9% depending on the currency being converted. Foreign transaction fees are charged by a credit card issuer, which is often a bank like RBC or BMO.
Head to your bank or credit union before you leave to avoid paying ATM transaction costs. You may even receive a better exchange rate. Credit unions and banks will exchange your dollars into a foreign currency before and after your trip when you have a checking or savings account with them.
If you have a Visa card, you'll pay the Visa exchange rate and Mastercard holders will pay Mastercard's exchange rate. In general, Mastercard tends to offer a marginally better exchange rate than Visa. That means your holiday spending will be slightly cheaper with a Mastercard credit card than a Visa credit card.
#1 HDFC Infinia Credit Card
The HDFC Infinia Credit Card is a travel credit offering a wide range of benefits. Forex markup fees are 2%, one of the lowest in the industry. Welcome benefits include a complimentary Club Marriot membership for a year and 12,500 reward points upon activation.
Foreign transaction fees vary by card issuer. This rate can even vary between card products from the same issuer. The table below provides both the typical FX fee by issuer, plus a selection of the cards without FX fees offered by that bank. Every major bank offers at least one card without foreign transaction fees.
Visa and Mastercard are the two largest card networks in the world, accepted in more than 200 countries and territories. Mastercard credit cards are more widely accepted internationally, while Visa cards tend to offer more benefits. But for most consumers, there is no practical difference between Visa and Mastercard.
Spending is almost always cheaper than withdrawing cash when you're on holiday. If you've a top overseas credit card, spending is almost always cheaper. Even on cards with no cash withdrawal fees, you'll usually still pay interest on the withdrawal until you pay it off. This goes double for non-specialist credit cards.
How do I pay internationally with a credit card?
You can enable your credit card for international transactions, either through internet banking or via the card issuer's app. An important point you need to know is that international transaction charges will be applicable if you use your credit card for international transactions.
You'll sometimes be given this option when taking cash from an overseas ATM too. Now, although you may think it is convenient to pay in pounds because you'll know how much will be taken from your account straight away, don't do it – ALWAYS PAY IN THE LOCAL CURRENCY.
Using credit cards for purchases when possible and using ATMs to get local currency for when you need to pay cash are by far the best ways to pay for things when abroad because you will get the wholesale exchange rate rather than the less favorable retail rate posted in currency exchange facilities or at bank teller ...
Best place to exchange currency: Your bank or credit union
Many banks offer currency exchange to their customers. Though there may be a small fee if you exchange less than a certain amount, your bank or credit union will almost always be the cheapest place to exchange currency.
Typically, the least busy times of the week are Mondays, mid-week and the weekend (excluding Friday). These days have the lowest number of transfers in the week, so you might expect to see less fluctuation in the mid-market rate.
Currency can fluctuate throughout the day too, with the morning or late afternoon cited as the best times to buy. These are just trends though and the currency markets fluctuate regularly, so keep your eye on them if you're looking to exchange currency soon.
Credit card issuers use currency exchange rates to bill you in U.S. dollars for transactions made in foreign currencies. These rates are set and updated daily by your card's payment network — Visa, Mastercard, Discover or American Express — and typically listed on your statement when you make purchases overseas.
If you buy foreign currency with your credit card you will be charged: On your credit card — buying foreign currency is treated as a cash withdrawal. This means you will incur a cash advance fee and daily interest charges.
A good rule of thumb when traveling is to select the local currency during payment to avoid conversion fees and to use a card that doesn't charge foreign transaction fees. Cash withdrawals from international ATMs are also subject to fees.
Across all considered European payment figures, Visa outperforms MasterCard.
Should I use Visa or Mastercard in Europe?
Debit cards with a Mastercard or Visa logo are widely accepted in Europe. American Express is somewhat less common, except at tourist destinations. Most banks charge a foreign transaction fee and/or a currency conversion fee, so it is worth double-checking these costs before departure.
Since Costco has an exclusive contract with Visa, shoppers can't use credit cards backed by the other three main networks — American Express, Mastercard and Discover — at Costco warehouses.
Credit cards are widely accepted in most countries so you don't need to carry as much cash. You also have the added reassurance that if your card is lost or stolen while away, we'll get a replacement card couriered to you and even provide emergency cash if required.
Visa and MasterCard levy a 1 percent fee on international transactions, and some banks that issue those cards also tack on a currency conversion fee (additional 1–3 percent). These are similar to the fees associated with using your debit card for ATM withdrawals.
Using a credit card with no foreign transaction fees and choosing to make purchases in local currency will nearly always save you money. Currency conversion apps can help you better understand pricing and identify hidden charges.
