Tag Archives: overseas transaction fees

Europe Update: 5 months to go

tower bridgeNow that we’ve booked our trip, there’s not a lot for us to do this month. Our flight is booked, and we’ve chosen our hotels. Our travel dates are set, and we’ve paid for the trip.

It’s been almost a month since we booked the trip, and I only have one regret so far: I didn’t use Ebates.com* when I booked the trip. I could have earned 2% back on the trip, which would have earned me about $70. It’s not a huge amount of money when you look at it next to $3500, but every little bit counts. That $70 could have bought us a pretty extravagant dinner in London. So I’m kind of kicking myself now. But I want to pass the lesson on to you: if you’re booking through Expedia, it’s absolutely worth it to go through Ebates! Don’t make the same mistake I did!

This month is all about research. We’ve made a tentative list of all the things we want to do and see while we’re abroad, and we’re making final decisions about what we’ll have time to do.

I’m also looking at discount cards for London and Paris. Both cities have discount “passes” that allow you to pay a single fee for free admission to a number of attractions. The passes are really only worth it if you plan to see a lot of the attractions available, so we’re trying to decide if it’s worth the money.

We made a list of the things we want to do without looking at the attractions available through the passes. Then we compared our list with what the pass offers.

The nice thing about the London Pass is that you can order it ahead of time and have it shipped to you. If you choose the option with transportation included, you can get right on the Underground from Heathrow and travel to the city with your pass. This would be incredibly convenient. Considering what we want to do in London and the cost of transportation, we’ve decided that the London Pass might be a good option. We’ll probably end up saving only a small amount of money, but the convenience will make it worth while. I added up all of our costs, and we’ll save a few dollars a day. But we’ll be able to skip lines, and we won’t have to worry about picking up Underground passes. I also think we’ll do more of the things we want to do if we pay ahead and we’re not counting dollars while we’re there.

The Paris Pass also includes transportation, but the attractions offered don’t line up quite as well with what we want to see. We’re still considering the option, but we might end up skipping the Paris pass and paying cash for what we want to do there.

To pay for the trip, I opted for the Capital One card. We’re charging all of our expenses on the card and paying them off right away. The card is interest free for the first year, we won’t pay any overseas transaction fees, and we’re earning 1% cash back on all of the money we spend. When we’re overseas, I plan to use the card to pay for food and other purchases that allow Visa. We’ll carry a small amount of cash, but I don’t want to get hit with high fees for ATM withdrawals and currency conversion. I also don’t want to end up with a bunch of pounds and euros at the end of the trip, so I want to keep our cash to a minimum.

That’s it for this month! Planning has actually been much easier than I anticipated so far. And next month we’ll be applying for passports, which we’re really excited about!

As always, I welcome any advice from seasoned travelers!

*referral link

Photo by anirudhkoul

Overseas transaction fees give me a headache

credit cardsWe’re not going to start booking until January at the earliest, but right now we’re doing a lot of research for our trip to Europe in May. That means we’re tracking airfare, putting together a loose itinerary, and researching the logistical aspects of traveling to another country.

One of the biggest headaches of traveling to another country is money. The last thing we want to do is carry all of our money in cash. A lost or stolen bag could be catastrophic. Taking cash out of an ATM is expensive, so we also don’t want to withdraw a daily cash allowance. Traveler’s checks seem like a hassle, but using a debit card or credit card will result in wasteful overseas transaction fees.

We’ve determined that the best way for us to handle money will be to carry a small amount of cash in the local currency, and then use a credit or debit card for the rest of purchases. We’ll have cash saved for the trip, so we’ll pay off the credit card immediately when we get home, but we don’t want to be stuck with ridiculous overseas transaction fees.

What are overseas transaction fees?

Here’s how it works: If you use a debit or credit card in another country or with an international company, you pay a transaction fee of 2-3% to the bank. On top of that, you’ll pay another 1-2% transaction fee to the credit card company backing your card (Visa or Mastercard for example). These fees are in addition to any applicable sales tax on your purchase.

Check out this CreditCards.com article for current transaction fees on popular credit cards as of June. Here’s what we’d pay for cards we currently hold:

  • American Express: 2.7%
  • Bank of America: 3%
  • Wachovia debit card: 3%

If we spend $4000 total on hotels, food, and other expenses overseas, we’d be paying a total of $108 to use the American Express card. American Express is only accepted on a limited basis, so we might end up having to use our Visa Bank of America card or Wachovia debit card, which would cost $120 in fees. That may not sound like a lot, but we could do a lot with that money in terms of food or entertainment. If there’s a way to avoid paying it in fees, I’d like to try.

If we withdraw cash every day, we’ll pay $5 per ATM transaction plus 2.7%-3% for purchases we have to charge, like hotels. That’s $60 in ATM fees over 12 days, plus a fee to the bank that owns the ATM for each withdrawal (usually $2-$3) for a total of $96 minimum. It’s also likely that we’d pay $2 per transaction to Wachovia, bringing the total to $120.

How can we avoid fees all together?

Capital One is the only company that doesn’t currently charge overseas transaction fees. Capital One doesn’t charge a fee, and they even waive the fee imposed by Visa or Mastercard. We don’t have a Capital One card, so we’d have to apply and open a new account just for this trip.

So I’m torn. We’d pay off the balance immediately when we return home, but still. I don’t know how I feel about opening another credit card for this trip. Is it worth it to save a little over $100? When I think about spending $5000 on a vacation, $100 seems like chump change, but then I think about what we could do with that money in Europe. On a frugal vacation budget, $100 can do a lot.

My other concern is with the changes happening in credit card companies, it’s possible that Capital One will suddenly start imposing overseas transaction fees.

Like I said, we won’t be booking anything until January, which means we have a few months to wait and decide. But even if we apply for the card and book our hotel in January, that doesn’t mean Capital One won’t suddenly start imposing a fee before May. Then we’ll have a new credit card for nothing.

What do you think? Is opening a new credit card worth possibly saving $108-$120, or should we just suck it up, use one of the cards we have, and factor the fees into our budget?

Photo by andresrueda