Don’t leave without verifying a key issue with your credit card.
- If you’re traveling abroad, you’ll likely charge your credit card for purchases.
- Some credit cards charge foreign transaction fees.
- These can make purchases unnecessarily more expensive when there are other cards that do not impose additional fees.
As coronavirus restrictions have eased around the world, many people are once again considering traveling abroad. But if you’re based in the United States and planning to go abroad for your next vacation, you’ll want to make sure you’re really ready to go.
Being prepared doesn’t just mean checking travel restrictions in your destination country, preparing your proof of vaccinations, and packing your luggage. You’ll also want to take a close look at the fine print on the credit card you plan to take with you on your trip.
Here’s why this is so important.
This rate can make all your purchases more expensive
If you plan to travel outside of the United States, you’ll want to find out if the credit card you’ll be using while abroad charges foreign transaction fees.
Foreign transaction fees are different from currency conversion fees. A foreign transaction fee is simply an additional cost imposed by your credit card issuer when you charge purchases outside of the country. Typically, when charged by a card issuer, these fees are around 3% of purchases.
This means that if you spent $1,000 while traveling on hotel stays, restaurants, or other purchases, you would incur a $30 fee. While this may not sound like much, it can add up, especially if you’re going on an expensive vacation or have saved up a lot. to pay for your trip and every dollar counts.
How can you avoid foreign transaction fees?
The good news is that you don’t need to pay a foreign transaction fee that makes every aspect of your vacation more expensive. These fees are easy to avoid if you read the fine print on your credit card and know about them in advance.
You can avoid incurring a foreign transaction fee by simply opening and using a credit card that does not charge one. Many travel-focused credit cards promise they won’t impose this extra cost on you, including travel cards that don’t have an annual fee.
Opening a travel credit card could not only help you save on foreign transaction costs, but it could also entitle you to other perks and benefits that also save you money. For example, many travel cards offer trip interruption insurance, lost luggage insurance, or car rental insurance. If you open a card with these characteristics and that does not charge a foreign transaction fee, you can significantly reduce your travel expenses, not only avoiding additional fees but also avoiding having to purchase this insurance coverage separately.
Traveling can cost a lot even under the best of circumstances, and there’s little reason to unnecessarily add an extra expense just because you don’t realize your card is charging you an extra fee. So be sure to carefully review the terms and conditions of your card. If you find that foreign transaction fees will be an issue, take plenty of time to research your options and open a new travel card before you set out on your trip.
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