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 could make your holiday a little bit more expensive.
1. 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
2. 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.
3. Consider opening a 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.
4. Or, you might want to have a multi-currency mobile wallet
You don’t need to specially open a multi-currency bank account to enjoy the benefits of a multi-currency account. You can just have a multi-currency mobile wallet, in an app.
There are quite a number of new players in this field as well — compare them here:
Digital Multi-Currency Accounts For Travel & Remittance: YouTrip vs TransferWise vs Revolut vs InstaReM
So if you are sick of paying overseas transaction fees, know that cash is not your only option. You can carry one of these multi-currency travel cards and convert the currency on the go, without paying hefty currency exchange fees.
5. Use a card that rewards you for overseas spending
If you cannot avoid paying the overseas transaction fees for your credit card spending overseas, at least ensure that you are rewarded for overseas spending.
For instance, the UOB Visa Signature Credit Card offers 10X rewards (or 4 miles per dollar) on all overseas transactions, including those made online. If you’re a miles chaser, you may just find that this compensates for the various extra fees charged.
Depending on your unique spending habits, there’ll definitely be a “best” card for your overseas spending. Compare all the cards by reading our article on the Best Credit Cards for Overseas And Foreign Currency Spending.
Some of the frontrunners include:
- Local Spend
- S$1 = 1.4 Miles
- Overseas Spend
- S$1 = 2.4 Miles
- Selected Online Hotel and Flight bookings
- S$1 = 6 Miles
Apply and spend S$500 monthly for the first 2 consecutive months to get S$150 Cash via PayNow OR Apple Airpods Gen 3 (worth S$269) OR Lenovo Tab M10 HD (2nd Gen) (worth S$269) (First 200 applicants) or S$50 Cash via PayNow (201 applicant onwards). T&Cs Apply.
6. Alternatively, link your current cashback credit cards with the Instarem Amaze Card
The Instarem Amaze Card is like a VPN for your credit card – you get away from the forex fees by linking it with your credit card. Your transactions will have the *Amaze affix, which is based in Singapore and you can stack your current cashback rewards with the Amaze card’s 1% cashback reward!
The downside is that it only works with Mastercard-issued credit cards, and you can only link up to 5 of them. You can freely swap between them within the app.
Here are the best cashback credit cards to link with your Instarem Amaze Card:
- Cash Back on Eligible Spend
- Min. Spend per month
- Cash Back Cap
- Cash Back on eligible spend
- Up to 1.5%
- Min. Spend per month
- Cash Back Cap
Apply and spend S$250 to get an Apple AirPods Gen 3 (worth S$269) or Nintendo Switch Lite (worth S$279) or S$250 Cash via PayNow. T&Cs apply.
- on Online Spend*
- S$1= 10X Points
- on Shopping Spend
- S$1= 10X Points
- on All Other Spend
- S$1 = 1 Point
What overseas spending 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:
- Currency exchange fee or currency conversion fee
- Cross-border transaction fee or foreign transaction fee
- MasterCard/Visa fee
Amex is both an issuer and a payment network, so it 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.
Do you really need credit card overseas activation?
You will need to activate your credit card for overseas usage only if the country you are going still depends on the magnetic stripe.
There are some overseas transactions that do not depend on the magnetic stripe, and hence you need not activate your card. These include point-of-sale EMV chip, eCommerce and overseas recurring transactions. The EMV chip is a small metallic square you can find on your card.
As EMV-based transactions are safer, they getting more commonplace now, with many European countries and Japan already on board. However, some countries like US and South Korea are still heavily reliant on the magnetic stripe.
To activate your card for overseas usage, you may call, log into Internet Banking, or SMS your bank.
Do you usually use your credit card when you’re abroad? Tell us why or why not in the comments!