What are foreign transaction fees and how can I avoid them?
While paying with credit cards does get you a better exchange rate than with cash, know that Visa itself imposes a 1% "commission" for foreign purchases/cash advances.
Many Visa-issuing banks—recognizing yet another good way to fleece its own customers—tack on additional 1%, 2%, or even 3% "commissions" of their own.
They will tell you this is a banking fee for performing the currency exchange.
They are lying.
This is because:
- The Visa corp has already performed the currency exchange before the transaction ever gets to your issuing bank (which receives the transaction in dollars), and
- It's all electronic, so there's really nothing to "exchange" in the first place.
These extra few percentage points your bank is charging is 100% profit for them, pure and simple, and they are stealing it from you.
Luckily, there is a way around this: a low-fee credit card.