Foreign Transaction Fees

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Paul Miller
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Foreign Transaction Fees

#1 Post by Paul Miller » May 30th, 2019, 1:57 pm

When traveling outside the US, I am sometimes asked when I use my credit card if I want the transaction to be in US Dollars, or if in the local currency. For example, if I buy a pair of shoes in Italy that cost Euro 200, do I want the transaction to be in Euros, or have the charge made in Dollars.

What's the best option?

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T. Melloni
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Re: Foreign Transaction Fees

#2 Post by T. Melloni » May 30th, 2019, 2:01 pm

I choose to pay in local currency as I understand my credit card bank exchange rate (e.g. Euros to Dollars) is more favorable than the exchange rate used by the merchants and its bank (called Dynamic Currency Conversion).
The same holds true for ATM withdrawals.
The Dynamic Currency Conversion (convert the exchange at merchant's rate at point of sale) has been shown to be less favorable than the exchange rate of my bank (credit card or ATM).
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George Hejna
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Re: Foreign Transaction Fees

#3 Post by George Hejna » May 30th, 2019, 2:20 pm

Almost always the local currency. There are some places you cannot. The Cayman Islands always charge in USD.

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Re: Foreign Transaction Fees

#4 Post by Barry L i p t o n » May 30th, 2019, 3:06 pm

Always local, there’s a 3% forex fee built in the dynamic conversion.

Be sure to use a credit card without forex fees and an ATM without forex or any outside of network fees (Schwab or Fidelity for example)

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Re: Foreign Transaction Fees

#5 Post by Kevin Sidders » May 31st, 2019, 6:27 am

T. Melloni wrote:
May 30th, 2019, 2:01 pm
I choose to pay in local currency as I understand my credit card bank exchange rate (e.g. Euros to Dollars) is more favorable than the exchange rate used by the merchants and its bank (called Dynamic Currency Conversion).
The same holds true for ATM withdrawals.
The Dynamic Currency Conversion (convert the exchange at merchant's rate at point of sale) has been shown to be less favorable than the exchange rate of my bank (credit card or ATM).
Well stated -- this is my approach
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Paul Miller
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Re: Foreign Transaction Fees

#6 Post by Paul Miller » May 31st, 2019, 11:11 am

Thanks for the responses.

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Andrew Kotowski
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Re: Foreign Transaction Fees

#7 Post by Andrew Kotowski » June 4th, 2019, 12:59 pm

Kevin Sidders wrote:
May 31st, 2019, 6:27 am
T. Melloni wrote:
May 30th, 2019, 2:01 pm
I choose to pay in local currency as I understand my credit card bank exchange rate (e.g. Euros to Dollars) is more favorable than the exchange rate used by the merchants and its bank (called Dynamic Currency Conversion).
The same holds true for ATM withdrawals.
The Dynamic Currency Conversion (convert the exchange at merchant's rate at point of sale) has been shown to be less favorable than the exchange rate of my bank (credit card or ATM).
Well stated -- this is my approach
+1 but with the addition that I like using the Chase Sapphire Reserve, which doesn't charge FX fees and gives 3x on travel/food.
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Re: Foreign Transaction Fees

#8 Post by Ramon C » June 5th, 2019, 5:41 am

Andrew Kotowski wrote:
June 4th, 2019, 12:59 pm
Kevin Sidders wrote:
May 31st, 2019, 6:27 am
T. Melloni wrote:
May 30th, 2019, 2:01 pm
I choose to pay in local currency as I understand my credit card bank exchange rate (e.g. Euros to Dollars) is more favorable than the exchange rate used by the merchants and its bank (called Dynamic Currency Conversion).
The same holds true for ATM withdrawals.
The Dynamic Currency Conversion (convert the exchange at merchant's rate at point of sale) has been shown to be less favorable than the exchange rate of my bank (credit card or ATM).
Well stated -- this is my approach
+1 but with the addition that I like using the Chase Sapphire Reserve, which doesn't charge FX fees and gives 3x on travel/food.
Plenty of credit cards these days do not charge FX fees, anymore.
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Re: Foreign Transaction Fees

#9 Post by geoffpm » June 5th, 2019, 6:45 am

I am also interested in this topic. I recently rented a house near Montpellier privately and had to wire the money to the landlord. I didn’t pay but the French landlord had to pay 165Euros .

Is there an alternative?
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Re: Foreign Transaction Fees

#10 Post by Andrew Kotowski » June 5th, 2019, 8:16 am

geoffpm wrote:
June 5th, 2019, 6:45 am
I am also interested in this topic. I recently rented a house near Montpellier privately and had to wire the money to the landlord. I didn’t pay but the French landlord had to pay 165Euros .

Is there an alternative?
TransferWise, in a heartbeat. Found out about it thanks to this board and it saved me a ton of money. Was super hesitant at first, as wiring sums of money internationally just feels like a disaster waiting to happen... but I've used at least 10-15 times and it works well. Referral below, in the even you're interested.

transferwise.com/u/andrewk341
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Dan Hammer
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Re: Foreign Transaction Fees

#11 Post by Dan Hammer » June 5th, 2019, 5:24 pm

Always get charged in local currencies.

If you want to avoid all fees, including ATM fees, please please please sign up for a free Charles Schwab account. This is what most of my travel friends do. All I do is put some cash in the account before I travel. For the record, I use this as my ATM card.

I use my CSR (Chase Sapphire Reserve) card to charge things.
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Re: Foreign Transaction Fees

#12 Post by geoffpm » June 8th, 2019, 5:48 am

Thanks so much for the suggestions. I have taken Andrew up on his offer.
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Re: Foreign Transaction Fees

#13 Post by Ethan Abraham » June 8th, 2019, 11:02 am

By the way another thing to note is that each of the 3 credit card companies fixes their exchange rate overnight. Lately it appears that visa has had the better rates but don't know if that's consistent. Also means that if you have a bill to pay in a foreign currency (say, a hotel prepay or wine) you have sort of a free option to wait to pay depending in how the currency moves.

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Re: Foreign Transaction Fees

#14 Post by Hao Lu » June 10th, 2019, 1:56 pm

Andrew Kotowski wrote:
June 4th, 2019, 12:59 pm
Kevin Sidders wrote:
May 31st, 2019, 6:27 am
T. Melloni wrote:
May 30th, 2019, 2:01 pm
I choose to pay in local currency as I understand my credit card bank exchange rate (e.g. Euros to Dollars) is more favorable than the exchange rate used by the merchants and its bank (called Dynamic Currency Conversion).
The same holds true for ATM withdrawals.
The Dynamic Currency Conversion (convert the exchange at merchant's rate at point of sale) has been shown to be less favorable than the exchange rate of my bank (credit card or ATM).
Well stated -- this is my approach
+1 but with the addition that I like using the Chase Sapphire Reserve, which doesn't charge FX fees and gives 3x on travel/food.
second this. Chase Sapphire Reserve is my go to card when traveling.

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Re: Foreign Transaction Fees

#15 Post by geoffpm » June 27th, 2019, 8:46 am

Well , I tried to use Transferwise and was able to send the money directly to my recipient in France but there was a snafu on their end, even though his bank account info was correct. The money was put back into my account and I tried to re-send it from France.

Here is where it gets weird. While in France, Transferwise insists that I manually wire the money from my BOA account to them. BOA caps wire transfers at $2500 and BOA charges me an additional fee. After a lot and back and forth with Transferwise, I decided to use paypal and split the fee with my landlord here.

Incredibly frustrating.
Geoffrey P Miller

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Andrew Kotowski
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Re: Foreign Transaction Fees

#16 Post by Andrew Kotowski » June 27th, 2019, 9:07 am

Good god. Cap at $2500 seems strange? I wired a bit more than that via HSBC, while based in France. Didn't have any problems with Chase in the US, either.

Sorry it stunk for you :(
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Re: Foreign Transaction Fees

#17 Post by geoffpm » June 27th, 2019, 11:57 pm

Andrew,

Transferwise was actually very responsive via twitter and it surprised me. The issue was accessing my funds while in the EU. I am going to take this up with BOA when I return. Having to use a captive wire transfer service on top of Transferwise is absurd. I spoke to my bank yesterday and they are waiving any fees charged from the aborted transfer.
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Re: Foreign Transaction Fees

#18 Post by geoffpm » June 27th, 2019, 11:59 pm

Also, the heatwave is reeking havoc on internet access in Languedoc. We have been up and down for 2 days and our cell phone coverage via Orange is one bar occasionally.
Geoffrey P Miller

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