Have you ever felt ripped off when using your credit cards for oversea transactions?
You will get surprised when using your credit cards on oversea transactions. For each transaction, card issuers may charge you any or all of the following fees:
1. Fee for using the card outside the issuing country.
2. A separate fee for using a foreign card in the country of transaction.
3. A higher than cash price due to purchase with a credit card (about 3% to cover costs to seller).
4. A sizable profit margin on the foreign exchange rate (5% in Australia at this time of writing). I am not aware of any legal regulations to protect card users on this fat margin.
5. The card issuer has the right to view the fluctuating exchange rate for up to one year after your transaction and pick the most unfavorable time for your exchange rate and then make the bill for the transaction on that unfavorable date (as long as it is after your actual transaction and before the printing of the bill). So the bill will be dated on that unfavorable date but won’t be sent to you for a few months! The delay is due to their picking for your most unfavorable exchange rate.
You may have felt that they gave you some extra breathing space! They would say that you had been given the benefit of not having to pay for a few months.
6. Then they send the bill to you and you are given the benefit of upto 28 days interest free period to pay your total account.
If all the fees and costs from 1 to 5 outweights the benefit received in 6 (usually they do by a sizable amount) then you should better carry local currency to pay for your oversea transactions.
If you buy oversea goods on the internet, you should use Paypal which instantanously offers you the FINAL cost in your local currency BEFORE you make the final decision to go through with that transaction.
This is a small trick that can take care of YOUR COSTS in using your credit cards.
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