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Live Currency Article:

Beware Of Using Your Credit Card Abroad?
By gerron woodruffe, Thu Dec 8th

Its summer. And for some lucky Americans, this means goingvacation to a far off land in hopes of relieving the stress ofeveryday life. In general, it is a very happy couple of monthsfor the regular American family but it can also be an evenhappier time for credit card companies. This is because of thefact that credit card companies are making a killing off themoney Americans spend on their foreign vacations throughquestionable fees. Imagine this situation. You and your familyare in Paris, France on vacation. Your wife sees a lovely pairof shoes that she must have and so being the good husband thatyou are, you purchase the $300 pair of shoes using your creditcard. Two weeks or so later, your credit card statement shows upand instead of you seeing a charge for $300 dollars, youstatement shows a charge for $309. How did this happen? Theanswer is that you were charge 1% foreign currency-conversionfee by Visa or Master to convert your foreign-currency purchaseinto American dollars and were also charged an addition 2%foreign transaction fee by your credit card issuer.

If you are form the U.S., when you make a purchase abroad withyour credit card, your credit card issuer will convert thecharge to U.S. dollars before it appears on your statement.Usually, this is done through the Visa or MasterCard networks,which charge a 1-percent foreign currency-conversion fee forconverting your foreign-currency purchase into American dollars.According to Kristin Arnold, a writer for, this isa good deal since changing your money in almost any other mannerwill probably cost you a lot more.

What is unsettling, however, is the additional foreigntransaction fee which your credit card issuer charges. This feecan range from 2-3%. According to Linda Sherry, the editorialdirector for Consumer Action in Washington, "Banks have beenmaking a profit off their customers for a long time, whileproviding no

service." In Agreement, Ed Perkins, a syndicatedtravel columnist and author of "Business Travel When It's YourMoney," says that these fees are pure gouging that credit cardcompanies know they can get away with. Foreign transaction feesdo not relate to any service that the credit card issuerprovides but instead is buried deep in the fine print of thecredit card agreement between the issuer and the customer. So inretrospect, while Visa or MasterCard may have done you a favorby converting your foreign-currency purchase into Americandollars for a fee of 1%, your banks additional charges weredriven by pure greed. So what can you do to avoid these fees?The answer is to do your research. Currently there is nostandard rate at which all banks and corporations charge, so youcould possibly find a card that does not add on any additionalfees for overseas purchases. For example Bank of America,Citibank, MBNA and JP Morgan Chase all charge 2 percent onoverseas purchases while Household Credit Services, ProvidianFinancial Corp and Capital One do not.

Another way that one can protect themselves from beingovercharged is to know and keep up with the latest currencyexchange rates. Visiting conversion sites like is a great way to do this. Having ageneral idea of the exchange rate will help you make moreinformed decisions when you purchase goods and services fromlocal vendors.

In the end, credit card companies are in the business to makemoney, however, it is up to you whether they get it from youhonestly or through underhanded practices.

About the author:Gerron Woodruffe is a contributing writer for GoCurrency.com GoCurrency provides information onglobal exchange rates, movements and news related information.

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