Shopping Overseas – Hidden Fees

Once you arrive in a country you are met with all kinds of opportunities to exchange your money. In fact, this can happen on the United States side at the international airport if you are taking off from a large enough airport.

One thing is for certain, you will need money but in what form is best? Should it be credit card, travelers checks or ATM/Debit card? Whatever you decide, make sure that you consult the banking or financial institution of any hidden fees or charges that will be added to your bill.

Travelers Checks – represent one of the safest forms of currency you can select. Although, they do have some drawbacks:

• Many companies, small shops, rural areas or third world countries won’t take Travelers Checks. If they do take them they are exchanged at the current rate often with other fees attached.

• Using Travelers Checks for purchases you can be charged a handling fee. Not to mention when you turn them back in their could be additional charges with your bank.

• Be wary of "commission free" offers – they often charge a higher exchange rate and/or add a handling fee. Make sure you know the total amount to exchange your money before you agree.

Credit Cards – offer the most convenient form of payment while overseas. The majority of shops, stores, companies will accept a credit card as a form of payment. Often you can use the card in an ATM machine while enjoying a favorable exchange rate too.

Be aware that often merchants may have a minimum charge amount and when you get your bill you will find international fees tacked on to your bill.

Some merchants abroad will offer to convert your bill to your home currency. This process is know as "dynamic currency conversion." This looks good on the surface. It will eliminate what fees may be tacked on and you will know the exact amount that will be on your bill.

However, the service comes with a charge attached, in the form of a much higher exchange rate for this transaction. The merchant benefits because they now get higher foreign exchange commissions. Many times you may not be asked, make sure that you look at your bill and see that you are being charged in the local currency not your native currency.

ATM/Debit cards represent a different approach to money while overseas. You go to the appropriate ATM machines and withdraw your local currency.

Major banks are charging for this service in two ways:

1. Exchange surcharge

2. Cost per transaction fee

You can view a list online of what the major banks are charging, effective June 2011. Just make sure you confirm these rates are in effect when you go abroad.

Given your particular circumstance, what works for you may not work for your neighbor or friend. Make sure you look at your credit card fees, debit card fees and travelers check fees and then make the decision.

Traveing overseas can be great fun. However, if you don’t have any buying power it won’t be.

Randal J. Watkins
Editor

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