By Mitch Lipka
June 13 Vacationers planning to go abroad this
summer can save big on their foreign currency transactions if
they plan ahead.
The best strategy for international travelers is to use a
credit card that doesn't charge extra fees for converting
currency, according to a study released today by Card Hub, a
web-based comparison site () where
consumers can apply for credit cards.
Those fees run from 1 percent to 3 percent of transactions,
and average 2.8 percent.
Consumers using a fee-free card can save an average of 8.1
percent compared to what they would spend exchanging cash at a
bank window, and they can save an average of 16.2 percent
compared to the most expensive alternative of all - exchanging
cash at an airport kiosk.
Some cards that avoid those fees are the Capital One
VentureOne and Venture Rewards cards; The Discover Escape and
Open Road cards, and the Chase Sapphire Preferred card. Some
premium American Express cards also steer clear of currency
Furthermore, the currency conversion rates that consumers
get when they pay for items and services with their credit cards
are better than the rates they would get by exchanging cash at a
bank window. In some cases, they are so much cheaper that
consumers will usually come out ahead even if they use a card
that charges a conversion fee, Card Hub says.
The study found that fees charged by banks to convert
currency can vary widely. None of the banks surveyed charged as
much as an airport currency exchange.
At the highest end of the scale were US Bank NA (14.2
percent more than with a no-fee card) and Fifth Third Bancorp
(10.6 percent more), Card Hub says.
Those with the lowest exchange rates were Northern Trust
Corp and BMO Harris Bank, which both were using $1.32 to the
euro and had no fees.
Card Hub's survey of 15 large banks was done using the
exchange rate of $1.26 for a euro -- the no-fee cards were
quoting on June 11. U.S. Bank, the expensive alternative, was
charging $1.44 per euro plus a $9.95 fee.
Here are what some other banks surveyed charged:
* Bank of America, $1.33 per euro (plus $7.50 fee)
* JPMorgan Chase Bank, NA, $1.333 (no fee)
* Citigroup, $1.3000 ($5)
* Wells Fargo & Co, $1.33 ($7)
* HSBC Holdings plc, $1.32 ($12)
In addition to Chase, Northern Trust and Harris, other no
additional fee banks include PNC Financial Services Group Inc
and Capital One. Wells Fargo was charging $12 last year, but
lowered its rate this year. Card Hub notes that the bank rates
would apply to customers of the banks.
Travelex, the largest operator of airport currency
exchanges, was charging $1.45 per euro plus a $9.95 fee, which
ends up costing a consumer 14.7 percent more than the no-fee
credit card, Card Hub says.
"Exchanging currency tends to be an important pre-trip task
for international travelers, but as this study illustrates,
doing so is not only unnecessary, but it will also cost you
quite a bit of money," Card Hub CEO Odysseas Papadimitriou said
in a statement released with the survey.
"Using a Visa or MasterCard credit card with no foreign
transaction fees, on the other hand, allows you to save as well
as avoid undue hassle, given that currency is converted
automatically whenever you make a purchase."
He also suggested bringing a debit card with a low foreign
transaction rate to access cash as needed rather than carrying
extra currency -- risking theft and another money-losing
exchange at the end of a trip.
It's also a good idea to notify you bank and credit card
carrier that you'll be traveling abroad, he said.
Lastly, Papadimitriou, suggested rejecting any offer by a
merchant to convert a purchase into dollars. That, he said, is
usually a ploy to pad the price by providing the consumer with
an unfavorable exchange rate.