We all look forward to vacation time. More so when its time to enjoy the European weather and soak in the history of the place. Vacations needs a lot of preparations, starting from applying for leaves, booking tickets and accommodation and managing the itinerary. We even spend lots of time fussing over the exchange rate. Though a lot of times we end up negative surprise when we look at the Credit card bill. Suddenly a purchase which looked like a reasonable bargain (after the exchange rate calculation done quickly in mind and checked again on calculator) doesn’t looks so attractive. Supposedly the Credit card bill amount for that item is higher by around 10%.So what did you miss? You were very sure about the exchange rate!!
Well there are a number of transactions charges one needs to pay attention to while using the credit card in a location outside India.
- Foreign Currency Conversion Fee: For the credit cards issued in India, it is supposedly denominated in Indian Rupees. When a transaction is made in a foreign country, that currency needs to be converted back to Indian Rupees. The Foreign currency conversion fee is charged by Visa/Mastercard and it is usually in the range of 1-2%. Sometimes these charges vary depending on the profit margins. These charges are readily available on Visa/Mastercard websites and it is suggested to check the same before leaving for the trip.
- Foreign Transaction Charge: Every time a transaction of any type is done on the Credit Card, the issuer (Various Banks, American Express) levies a Foreign Transaction Charge which amounts to 2.5-3.5% of the transaction value. This information is available on the websites of the issuer bank or in the statement of Charges provided by the issuer.
- Cash Advance Fee: Withdrawing cash on your credit card is one of the most expensive way to get cash and even within India there are charges for the same. This charge goes up when it is done internationally. This may result in an additional fee in the range of 1-4% of the withdrawal amount. This International Cash Withdrawal charge is over and above the standard costs incurred by the card-holder while withdrawing cash in India.
Currency Conversion Rate:
The conversion rate is decided by Visa/Mastercard for each day, one day in advance and it remains unchanged for the day. Though the transaction made by you while travelling may have a different exchange rate than the one on the date you made the purchase. Reason being that the transactions are valued on the basis of settlement date, and there is usually a delay between you making a transaction and the same being presented to Visa/Mastercard by the merchant.
So be careful of these charges on your next vacation.