The foreign transaction fee is charged by your card issuer when you make a purchase in a foreign currency or with a foreign financial institution. You should be familiar with tips to save money when making frequent money transfers.
In addition to the cost of travelling abroad, foreign transaction fees can quickly add up on every little purchase. But what are foreign transactions, how much do they cost, and how can you avoid them? Read on to find the answers to your burning questions.
It is the bank processing the transaction that charges this fee, not the merchant who accepted the payment. Some merchants do not always include this fee in their advertised prices when accepting cards from other countries.
What are the fees associated with foreign transactions?
The card issuer charges an extra fee for processing international transactions at a certain percentage. Usually, this percentage falls between 1% and 3%. A separate fee will usually appear on your card statement for this charge.
Tips to Avoid Foreign Transaction Fee:
1. Avoid Airport Exchange Rate
At the airport, travel exchange bureaus charge a high margin on the exchange rate. RemitX or another local money changer is your best bet if you need to exchange your currency. In addition, carrying the currency of the country you are visiting is always a good idea.
2. Make few ATM Withdrawals
Any time you use an out-of-network ATM, your bank or credit union charges a surcharge. Similarly, foreign exchange fees are tacked on when traveling outside of the country, resulting in even higher final fees.
When withdrawing money from an ATM in a foreign country, it’s always best to withdraw as much as you will need right away so that you don’t have to make multiple trips.
Pro Tip: Check if your bank has an ATM partner overseas to find out which ATMs you can use.
3. Avoid the Dynamic Currency Conversion
Banks may opt to enable “Dynamic Currency Conversion” on their network of ATMs and POS Machines in some countries.
By using this facility, the ATM/POS machine recognizes that the Forex Card originates from a foreign country and offers the customer the option of transacting in either their “home currency” (in the case of Indians, it would be Rupees) or their “local currency” (the local currency corresponding to where you are located).
When the Cardholder completes the transaction in their local currency, their account will be debited according to the exchange rate offered by the Merchant’s Acquirer.To avoid any adverse exchange rate, the customer must avoid any option that prompts for a change in usage currency.
4. Avoid traveler’s checks
Traveler’s checks are a good alternative to carrying cash. However, they are outdated and require your signature for every use. Some vendors may not accept them too!
Is it possible to opt-out of foreign transaction fees?
If you aren’t charged a fee, then there is no need for you to dispute it. Most banks that are foreign-friendly allow you to forgo foreign transaction fees and do not charge you any hidden fees for making purchases in any foreign country.
With the right credit or debit card in your wallet, you can avoid foreign transaction fees. Get a debit/credit card or checking account that offers zero transaction fees before your trip to ensure you have time to receive a new credit or debit card by mail.