Just because you’re overseas on vacation, doesn’t mean you shouldn’t still pay attention to fees. Visa and Mastercard charge a standard 1% “conversion” fee on all foreign transactions (even if they are in US dollars!.) Many major credit card issuers charge you up to another 3% on top of that. Why? Because they can.
But by selected the best credit card in your arsenal, you can minimize the damage. Flyertalk has a great resource listing all the card issuers and the rates they charge. Don’t forget to also take into account the cashback program of your specific card, as you’ll still earn it on foreign purchases.
Citibank charges the 1% Visa/MC fee and 2% extra from themselves. Overall basic surcharge: 3%. Same for Chase and Bank of America. If you get 1% cashback, that’s still a 2% overall surcharge.
The best card (neglecting cashback) may actually surprise you. It’s Capital One! Although they are known as a subprime lender, they generously waive the 1% Visa/MC fee and they don’t charge their own fee. Overall basic surcharge: 0%.
The best thing is that I have an old Capital One card with a grandfathered-in rewards program that gives me flat 1% cash back (only credited annually, though). I don’t use it regularly because I can always do much better with 2-5% back.
But on trips? 1% overall cashback with Capital One is the best deal I’ve got.
Just like here, you have to worry about ATM fees both at the ATM you actually use and the ATM card issuer. According to the FlyerTalk table, for me the best bet is probably my HSBC ATM card. If I find an HSBC ATM, I would only pay the 1% conversion fee. If I don’t, I just get charged an extra $1.
Bank of America is horrible as it charges you $5 a pop, but if you can find one their affiliated foreign banks you get off with no fees. As usual, if you use a bank that does ATM rebates here is where you’ll be glad you did.
In general, I’m going to try to pay for everything with credit cards first (just like at home!) for security and the 1% cash back. After that, I’ll also carry a decent amount of cash with me, and then use an ATM if I need to reload.
I rarely usually use traveler’s checks anymore. It’s easier to find an ATM these days than a place that takes traveller’s checks. I’ll have backup cards hidden in different places in case something gets lost or stolen.