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Best International Credit Card

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This Thanksgiving, my wife and I will be heading to London, England, to visit good friends of ours who are working there. Given the recent economic unrest, it seems pretty foolish for us to try to play any games involving exchanging money so we’ll try to convert as little as possible directly, instead we’ll resort to using credit cards as much as possible so we orphan (leave in pounds sterling) as little cash as necessary.

When it comes to using credit cards abroad though, it’s gotten a little more complicated than your classic “foreign transaction fees.” It turns out that in addition to the issuers and banks charging you a fee, some merchants will add a “Dynamic Currency Conversion” fee on top of everything else. That can be as high as five percent!

International Card Use Fees

After a little research, here are the three fees as best as I can decipher them:

Card Issuer Foreign Currency Conversion Fee (%) Issuer Fee (%) Dynamic Currency Conversion (%) Total Fee (%)
American Express 2% 0% 0% 2%
Bank of America 1% 2% 0-5% 3-8%
Bank One 1% 2% 0-5% 3-8%
Capital One 1% -1% 0% 0%
Chase 1% 2% 0-5% 3-8%
Discover 0% 0% 0% 0%
First USA 1% 0% 0-5% 1-6%
MBNA 1% 2% 0-5% 3-8%
Providian 1% 1% 0-6% 2-8%
US Bank 1% 2% 0-5% 3-8%

  • Foreign Transaction Fee: The foreign transaction fee refers to the fee that is charged by the payment processor (Visa, Mastercard, etc.) to handle the foreign exchange.
  • Issuer Fee: The issuer fee refers to the fee that the bank charges to handle the transaction.
  • Dynamic Currency Conversion: That’s the fee charged by the merchant for the acceptance of your card. This fee often times covers the transaction fees levied by international payment processors.

Example Use Case

Let’s say we have and Bank of America credit card and we go buy something at a pub in London. When we pay our tab, there are potentially three fees levied on top of our bill for goods and services. First, Visa, the card issuer, will charge us a 1% fee for handling the transaction. Then, Bank of America will want a piece of the action and charge their own 2% fee. Finally, the pub, in trying to recoup its own costs, tacks on a dynamic currency conversion fee on top of everything of 5% (let’s just say). That means your bill started at $20 USD and suddenly became $21.60 after fees, or 8% more.

Best International Card: A Capital One

The two best choices for international spending appears to be a Discover Card or a Capital One card. One interesting thing I’ve learned, again in doing research, is that Discover card, because it’s such a smaller network compared to Visa and Mastercard, simply isn’t widely accepted. It’s not as widely accepted here in the US either, so that’s not surprising (and why we can’t recommend it as a best credit card).

If you’ve done a lot of international travel and have any recommendations, we’re all ears!

Big Ben here we come!

{ 56 comments, please add your thoughts now! }

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56 Responses to “Best International Credit Card”

  1. Justin says:

    DCC fees CAN be charged to a Capital One Visa; I’ve just confirmed it.

    Holiday Inn told me my bill was 85 euros (as expected), they handed me a receipt to sign, and I signed it w/out reading it because I simply trusted them. I inspected the receipt later, and see that I was charged 112.20 USD. The cash register receipt in fact states that a 3.5% commission was applied. After looking at what the wholesale exchange rate commission was for that day and doing the math, I discovered that Holiday Inn actually charged 5.2% above the real exchange rate. The credit card statement didn’t even show the euro amount.

    Anyway, the point is, Capital One cards are not immune from this scam – but Amex and Discovercard is. Examine your receipts, and refuse to sign if a USD amount appears on the receipt.

  2. Justin says:

    Mr. Wang, you should change the title of this article to: “Best International USD-based Credit Card for Americans” The credit cards you list are generally not available to non-US residents, AFAIK.

    Also, Capital One does have a UK division, but from what I hear, that particular Capital One Visa card does not waive the foreign conversion fees. You might want to clarify that so Brits don’t waste their time and get a nasty surprise.

    BTW, I’ve been looking for an international credit card similar to Capital One, but based in euros so the payment can be made in euros. Any recommendations?

    • Jim says:

      Hi Justin, you are correct, it is USD-centric. As for international credit cards based in Euros, I’m afraid I don’t know because I’m unfamiliar with credit cards outside the country.

  3. KingAsa says:

    This site has a pretty comprehensive list of credit cards and bank ATM fees for international use:
    http://flyerguide.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange

  4. Claire says:

    Hi, what will be the best way to access an ATM while in England to get pounds…? Are there some credit cards better than others, or debit cards…..that don’t have any fees for those transactions….thks.

    • Justin says:

      See KingAsa’s post just above yours. The best card is obviously the Charles Schwab card. There’s no currency conversion fee, and you actually get 2% back.

      BTW, the table at the top of this article is not correct about Capital One. Capital One does in fact have a 0-5% DCC fee.

  5. jason says:

    Your information in the chart is out of date. Discover sent out a mailing to me last month stating that they will start charging a 2% transaction fee for all foreign transactions starting on 6/1/09.

  6. Sean says:

    Although it’s not a credit card, the Charles Schwab High Yield Investor Checking Account pays all international and domestic transaction fees (including ATM and Visa exchanges fees both domestic and international). After vacationing in Europe for over two months, I got a refund (always at the end of the month) in over $200 in ATM/Visa exchange fees.

    Again, it’s not a credit card, but I think it’s much better given that few places accept credit cards in Europe. Check it out at http://www.schwab.com

    • Mary Beth says:

      Sean,
      I checked out the Schwab high yield investor checking but the fine print says it does not cover foreign exchange fees from ATM withdrawals. You say though that you have received refunds for those fees? We’re going to London in August and thought it might be the best way to beat our bank’s 2.5% finance charge for FX on ATM withdrawals. Would you agree?

  7. Jeff says:

    Thanks for informing us, Sean. I have the Capital One Money Market debit card. They pay around 2% on your money in the account, which you hook up with your usual bank or credit union checking account in order to transfer money to them. I am not aware of a refund on the ATM machine fees, but it is their own card, not a VISA debit card, so you will NOT pay any international transaction fees.

  8. Vicki says:

    Most of this is very interesting but does anyone have information on getting an “international card” to use in South Korea? South Korean seems to do things very differently than others…..

  9. Carl says:

    Aside from the transaction fee, does anyone know if one credit card gives a better exchange rate than the others?

    Thanks

  10. Jeff says:

    The exchange rate that the credit card companies use should be virtually the same for all of them as it goes through a clearing house.

    Just use the Capital One credit card when out of the US and you won’t get charged the foreign transaction fee, which varies fro 1 to 4% with the other companies. Check your contract or call them to verify.

    The one problem to avoid is letting a foreign vendor charge you in dollars, as the car rental company National tried to do with me in England. They “converted” the pound at the rate of $1.70 and told me it would cost me such and such dollars. At the time, the posted rate online was $1.64. Always pay in the local currency and you will get a better exchange rate.

  11. Andrea says:

    Does the no-fee still hold true for Capital One? I happen to have a credit card with them, and would use exclusively as I’m moving overseas. Also, what does it mean that Capital One charges a 1% foreign currency fee and a -1% issuer fee?
    Thanks.

  12. Patrick says:

    Very interesting forum but as a Canadian resident I don’t find the same conditions as US residents regarding the Capital One Master Card.
    I just received a new Capital One Master Card and read the literature.
    We have a 2.5% currency conversion charge.
    Also, when you buy in a foreign country, your purchase is converted by Capital One into US dollars then into Canadian dollars.
    Capital One conditions are: “…when you use your card to make transactions in a foreign currency, we receive the transaction in US$ and convert it into Cdn$. We make the conversions at our rate of exchange current at the time, plus a 2.5% currency conversion charge.
    Nobody at Capital one has been able to give me the rates at each step of the transaction (buy or sell exchange rates???). Why Capital One Canada would not go directly from Euro or Yen to Cdn dollar? Would somebody knows how it works and what is the final percentage rate applied to your purchase?

  13. michael crichton says:

    does capital one credit card charge you overseas charges? also does it charge you currency exchange charges?

  14. Kari says:

    To update, I just called Capital One to confirm and there still are no extra charges to use the card internationally.

  15. Mike K says:

    Only weird thing is that capital one cannot tell you the exchange rate they use themselves for any of your foreign charges or what the original amount of your foreign charges were (in the foreign currency). This concerns me a bit because if the foreign company pads a bit on, you wouldn’t have any way of knowing.

  16. Ellen says:

    Nice to know its,which the higher and the lowest charges fees of the bank.
    it would be nice too if we can get from Discover or Capital One as I read in their website that the bank allowing to transfer balance until next year.
    I think it will very good for me for pay all my debt.

  17. madhu says:

    I m an indian citizen…i wl b going to europe for a month….can anyone tell me which card should i carry….i already hv a mastercard….is it gud enough for europe or should i think of someth else. …n what should i prefer. .credit card or ATMs

  18. jim says:

    I used my capital one debit card during my trip to South Korea and enjoyed 0% fee on purchases. However, I weren’t able to find a bank or atm machine that’ll let me withdraw any cash from the card. (it’s master card)

  19. Terry says:

    I do a good bit of traveling and just returned from London. It has been increasingly difficult to use our credit cards throughout Europe because we don,t have a “chip” in them. I will not use a debit card abroad due to the risk of fraud. Anyone know of a credit card that has a chip in it. Many places there now cant even swipe your card to use a signature.


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