If you’re using your credit card while on vacation, it’s probably better to hide bundles of money in socks and underwear to deter thieves. It also saves you a trip to Mustafa to change money every time you come on a vacation abroad.
But of course there are costs associated with all comfort. Every time you use your credit card to pay for something abroad, you pay extra fees and charges that could make your vacation a little more expensive.
1. Compare the fees for each of your cards
As you can see, most cards charge a combination of the above three types of fees. There is currently no difference between the MasterCard and Visa fees when using your cards abroad.
You should therefore compare the total cross-border transaction fee + the exchange fee charged by each of your cards.
The easiest way to find out is to call your bank and ask. Your fees vary depending on:
- The bank that issues the card
- Whether Visa, MasterCard or Amex
- Any waivers or discounts on foreign transaction fees / foreign exchange fees that are specific to your particular card
2. Never pay in Singapore dollars while abroad
If you’ve ever tried to use your credit card abroad, the checkout may have asked you whether you want to pay in Singapore dollars or the foreign currency.
Always choose to pay in overseas currency.
If you choose to pay in SGD, you will be charged fees Dynamic Currency Conversion Fees This will add an extra percentage to your bill so you can see how much you are paying in Singapore dollars.
Additionally, if your credit card company offers you better cashback, rewards or miles for foreign currency spending, paying in SGD may result in these transactions being counted as SGD transactions and not qualifying for the better perks.
Be careful when swiping your card and inform the cashier that you want to pay in overseas currency, otherwise they may be carelessly choosing SGD for you.
3. Consider opening a multi-currency account
If you are a true jet setter you should consider one Multi-currency account like the DBS multiplier account.
You can then wait to convert SGD to your currency of choice when exchange rates are favorable, add that money to your account and use your debit card to pay while traveling, or simply withdraw cash at your destination. This way, you can completely avoid currency conversion and foreign exchange fees.
Of course, using a debit card instead of a credit card still carries some risks.
If you later want to challenge a charge because you were defrauded or your card was used fraudulently, the process will be a little more stressful as the money has already been withdrawn from your account. However, you retain the same right to dispute charges as credit card holders.
4. Or maybe you want a mobile wallet with multiple currencies?
You don’t need to open a multi-currency bank account to enjoy the benefits of a multi-currency account. You can easily have a multi-currency mobile wallet in one app.
There’s a whole slew of new players in this area too – compare them here: Digital Multi-Currency Accounts for Travel and Transfers: YouTrip vs TransferWise vs Revolut vs InstaReM.
So, if you’re tired of paying overseas transaction fees, know that cash isn’t your only option. You can carry one of these multi-currency travel cards with you and exchange currency on the go without paying high exchange fees.
5. Use a card that rewards you for overseas spending
If you can’t avoid paying overseas transaction fees for your credit card spending abroad, at least make sure that you are rewarded for overseas spending.
For example, the UOB Visa Signature Credit Card offers 10X rewards (or 4 miles per dollar) for all international transactions, including online transactions. If you are a mileage hunter you may find that this offsets the various additional fees.
Depending on your individual spending habits, there will definitely be the “best” card for your international spending. Compare all of the cards by reading our article on the best credit cards for overseas and foreign currency spending.
The front runners include:
6. Alternatively, link your current cashback credit cards to the Instarem Amaze Card
The Instarem Amaze Card is like a VPN for your credit card – you avoid the Forex fees by linking it to your credit card. Your transactions have the * Amaze affix based in Singapore and you can combine your current cashback bonuses with the 1 percent cashback bonus of the Amaze card!
The downside is that it only works with Mastercard-issued credit cards and you can only link up to five of them. You can switch freely between them within the app.
Here are the best cashback credit cards to link to your Instarem Amaze Card:
What are the overseas spending fees for swiping my credit card?
While the fees for using your card abroad may vary from card to card, in general they look like this:
- Currency Conversion Fee or Currency Conversion Fee
- Cross-border transaction fee or international transaction fee
- MasterCard / Visa fee
Amex is both an issuer and a payment network, so there is another system in place where you have to pay a flat fee, but all in all you have to pay around 2.5-3.3 percent in fees.
Do you really need credit card activation abroad?
You only need to activate your credit card for use abroad if the country you are traveling to is still dependent on the magnetic stripe.
There are some international transactions that do not depend on the magnetic stripe, so you do not need to activate your card. This includes EMV chips at the point of sale, e-commerce and recurring transactions abroad. The EMV chip is a small metal square that you can find on your card.
ALSO READ: Credit cards for foreign nationals working and residing in Singapore are worth applying for
As EMV-based transactions are more secure, they are now becoming more common, with many European countries and Japan already on board. However, some countries like the US and South Korea still rely heavily on the magnetic stripe.
To activate your card for use abroad, you can call your bank, log into internet banking or send an SMS.
This article was first published in MoneySmart.
