Credit Cards

Using Your Credit Card on Holiday – Know How Much Overseas Fees You Are Incurring

credit card overseas fees

Joanne Poh

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Using your credit card when you’re on holiday sure beats hiding wads of cash in your socks and underwear to deter thieves. It also saves you from having to make a trip to Mustafa to exchange currency each time you’ve got an overseas holiday lined up.

But of course, with all conveniences, there are costs involved. Each time you use your credit card to pay for something overseas, you pay extra charges and fees that make your holiday a little bit more expensive.

 

What overseas fees do you incur when you swipe your credit card?

While the charges for using your card overseas can vary from card to card, in general they look something like this:

  • Cross-border transaction fee
  • Currency exchange fee
  • MasterCard/Visa fee

Amex has a different system that will have you paying a flat fee, but all in all you’re looking at paying about 2.5% to 3.3% in fees.

 

How do you minimise your fees?

Compare the fees being charged by each of your cards

As you can see, most cards will charge a combination of the above three types of fees. At the moment, there is no difference between the MasterCard and Visa fee when you use your cards overseas. You will thus want to compare the total cross-border transaction fee + currency exchange fee being charged by each of your cards.

The easiest way to find out is simply to call up your bank and ask. Your fees will vary based on:

  • The bank issuing the card
  • Whether it is a Visa, MasterCard or Amex
  • Any waivers or discounts on foreign transaction fees / foreign exchange fees specific to your particular card

 

Compare the cashback or other perks your cards are offering on online spending

Don’t forget to compare your cards based on any cashback or other perks that being offered on overseas spending that can offset your foreign transaction fees further.

For instance, if you are using the UOB One Visa card, you will be charged a total fee of 2.8% for transactions in foreign currencies. However, if you can meet the minimum spending requirements, the card gives you up to 5% cashback, which more than compensates for the extra fees you’ll be charged.

 

Never choose to pay in Singapore dollars when you’re abroad

If you’ve ever tried to use your credit card overseas, you might have been asked by the cashier if you wanted to pay in Singapore dollars or the overseas currency.

Always, always choose to pay in overseas currency.

When you choose to pay in SGD, you are charged dynamic currency conversion fees that will tack on an extra percentage to your bill in exchange for the convenience of being able to see how much you’re paying in Singapore dollars.

What’s more, if your credit card company is offering you better cashback, rewards or miles for foreign currency spending, opting to pay in SGD could mean these transactions get counted as SGD transactions and do not qualify for the better perks.

Make sure you pay attention when you swipe your card and alert the cashier that you wish to pay in overseas currency, otherwise they might just carelessly select SGD for you.

 

Consider opening a multi-currency account

If you’re a real jetsetter, you might want to consider getting a multi-currency account such as the DBS Multi-Currency Account.

You can then wait to exchange SGD with your currencies of choice when the exchange rates are favourable, deposit that money into your account and use your debit card to pay for stuff when you’re travelling, or simply withdraw cash at your destination. This will enable you to escape currency conversion and foreign exchange fees altogether.

Of course, there are still some risks to using a debit rather than a credit card. If you later want to dispute a charge because you were scammed or your card was fraudulently used, the process will be a bit more stressful as the money will have already been deducted from your account. You nonetheless retain the same rights to dispute charges as credit card holders.

Do you usually use your credit card when you’re abroad? Tell us why or why not in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.