QL,
Thanks to you, I did apply for the United affinity card. I want a 1% foreign exchange fee.
But when I talked to the FirstUSA rep, she explained it, as a 1+2%=3% fee for cash. So I am waiting to find out the real rate!

RoadRunner:

I've tried to clear this up several times now but apparently we're not communicating. Paying for something with a credit card is different from getting a cash advance. Cash advances have large fees associated with them. I have never taken a cash advance. You should never take a cash advance. Just pay your restaurant, hotel, etc. with the 1% credit card.

To get cash, use your plain old ATM card your bank gave you when you opened your checking account. It works worldwide, giving you local currency, usually at the same minimum 1% markup. I've actually heard of some credit unions that charge no markup at all, but I don't know the specifics.

Does this clear it up?

I have such a card -- a visa from Silicon Valley FCU. No cash advance fee. If you "prepay" the bill (send in money, then use the card overseas), there is no interest, either. And the exchange rate is the same as an ATM.

Opus,

Boy, this topic is more complicated than I thought. There are (at least) three types of charges when using a card for a foreign transaction:

1. Cash advance fee. This is typically a percentage of the amount advanced, usually with a minimum of $5 or so. This fee is assessed pretty much universally on credit cards. On ATM/Debit cards it is generally not assessed. It is only assessed when using a credit card to get cash, not when using the card to pay for something.

2. Markup or commission over Interbank ecvhange rate. This is an "invisible" charge on both credit and ATM/Debit cards. It will not appear explicitly on your bill. You must figure it by comparing the exchange rate on your bill with the published Interbank exchange rate for the day of the purchase (sometimes the day after or a different day). This ranges from 1% for the FirstUSA Mileage Plus Visa/MC and most ATM/Debit cards to a whopping 4% on some credit cards. 2% is now the norm.

The best way to get foreign currency is to go to the foreign country and use your ATM card at a local ATM. Usually you will be charged no fee (unless your back charges a fee for ATM use) and the price you pay will be only 1% over the Interbank rate, which is about as low as you can get.

QL: Totally agree. I know all the fees. I use both my ATM and my (unusual) credit card, and the cost to me are just about identical.

It is also true that just about any other credit card incurs the fees you describe.

Years ago, I used to have a "line of credit" card from Chase -- that also had no cash advance fee, the 1% currency exchange fee, and was taken by ATM's. (I think it looked like a Mastercard to the ATM, but it wasn't a mastercard -- it could not be used for purchases). The downside is that it had 19.6% per annum interest. It was still a better deal than changing money at a bank, but slightly worse (due to interest) than the ATM.

My current card has low interst, and a little planning or fast payment minimizes or negates that cost.

These types of cards are rare, so the general advise that ATM is the way to go is totally accurate.

Whew, getting a cash advance at a foreign ATM has to be the most expensive thing you can do with a credit card in terms of added fees. The mind boggles at all the possible charges. I can count five!

The cash advance fee- most (but not all) credit cards charge this. Usually about 3% of the transaction, sometimes with a minimum or maximum, such as $10 or $20 max. This charge is made by the bank that issued your card.

The foreign exchange rate- Visa and Mastercard add at least 1% to the wholesale exchange rate on the foreign currency exchange as a "service charge" on every foreign currency transaction. As QL mentioned, Mastercard charges more for this than Visa. Also, as QL pointed out, this "fee" is "hidden" and built into the exchange rate.

The "foreign currency transaction fee"- in the last few years many credit card issuers have started charging this. It is a 1% or 2% markup ON TOP of the exchange rate premium that Visa or Mastercard already charges. This fee is added on by many credit card issuers. (For example, First USA charges this fee with their regular First USA cards, but not on their Mileage Plus affinity card).

Interest charges- All credit cards start charging interest as soon as you take a cash advance. There is no grace period as with purchases. And many cards have a separate, higher interest rate especially for cash advances.

And then on top of all these charges, some ATMs charge $1.00 to $3.00 just to use their ATM (not a common thing outside the USA).

Opus, you make an intriguing point- if you send cash in and create a credit balance on your card, then you can avoid the interest charge. Have you done this? A few times when my credit card has had a credit balance, the credit card company mailed me a check for the negative amount. I can imagine that if I tried this, the credit card company would cut a check for the amount before I used the card at an ATM, and I would get stuck with the interest charges.

Oh, and so as not to confuse anyone, the fees I mentioned above do not apply to ATM cards (except the ATM usage fee), so I agree that an ATM card is best way to go when spending your money in a foreign country!

Wow, I can't believe you read all the way to the end of my message on this very dry subject

Paying up front on the credit card does avoid the interest payment -- at least on my credit union Visa.

You are right about the "5 fees", but I was very careful to get a card:

1. Cash Advance Fee -- $0 for this card.
2. Exchange Rate fee -- see below
3. Foreign Exchange Surcharge -- it looks to me to be about 1% combined for the two (#2 and #3)-- just about what I would be changed with an ATM card.
4. Interest - 0-13% year, depending if I pay in advance. If I pay the card quickly, the money is still much less than the transaction fee from a money changer.
5. ATM fee -- normally not charged on American cards overseas (the reverse also works, European cards normally don't get charged a fee at American bank ATM's -- although they do at kiosk ATM's in places like the 7-11).

The advantage for me to use the credit card (which I never use for anything other than cash advances) is just accounting -- keeping a distinct tab.

Sorry, QuietLion, to hijack your wonderful travellogue -- please continue!

QuietLion writes, in his last installment, that IMHO you should consider obtaining an INSPass. Whether you use it or not (and even if the US entry airport does not have INSPass facilities), you will find that if you place the INSPass card on top of your Customs Declarations form, which is then placed on top of your passport, and hand all three to the Customs inspector, the vast majority of the times they will let you pass without saying a word.

QL,

i was in phuket that week as well.i was set up to do a liveaboard and when i arrived in phuket the nite before i was to sail (i'd come from cambodia) i was told the boat was broken. it was also less than half full for a one week trip...

i wound up spending all (but that one nite) in cambodia...phuket and bkk shockingly touristy after cambodia!

Well, from what I'm observing, the Cambodian government is deadset on turning Siam Reap into the next Disney-odia within about the next five years.

i agree with you UAL Traveller...for now, though, if i could figure out a way to get another (one world) reduced award to get me near there, i'd go back tomorrow...

QuietLion,
How do you keep such a slim waistline with all that rich food and drink?

<duplicate>

[This message has been edited by biff (edited 03-13-2001).]

As a rule, he doesn't eat dessert.*




*except the following: chocolate, ice cream, cookies, cake, anything HunnyBear offers him, and anything that is complimentary.