What is a good foreign exchange fee? (2024)

What is a good foreign exchange fee?

A foreign transaction fee is a fee charged by a credit card issuer or bank for every transaction made in a country outside of the U.S. Fees vary depending on the credit card or bank's terms and conditions, but usually fall between 1% and 5% of the purchase amount.

What is a reasonable exchange rate fee?

Many, but not all, credit and debit card issuers and ATM networks charge a per-transaction fee on purchases or withdrawals made overseas or when ordering online with a foreign merchant. The fee varies but typically runs between 2% and 3% of the dollar amount of the purchase or withdrawal.

What is a reasonable foreign transaction fee?

Foreign transaction fees are typically around 2-3% of each transaction in U.S. dollars. 1 This fee might consist of a 1% fee charged by the payment processor, such as MasterCard or Visa, plus another 2% fee charged by the card issuer, such as Bank of America or Wells Fargo.

What is good exchange rate?

A good exchange rate means you get the most value for your money during a currency transfer. To determine what's “good,” you must understand what's normal by checking the mid-market rate. This term refers to the midpoint between the buy and sell prices of any two currencies across different vendors and banks.

Why are currency exchange fees so high?

Most banks in most places lose a lot of money on operating bank accounts for customers, and make the money back by charging more than their costs for services like currency exchange. If you don't choose to pay those fees, use an online service instead.

What is the typical bank fee for currency exchange?

Banks typically charge either a flat fee or a percentage, such as 1% to 3% of the amount you take out at an ATM in foreign currency. Determine your bank or credit union's policy on reimbursing ATM fees so you can plan ahead. Download your bank's app ahead of time to help you locate nearby ATMs.

How do I avoid exchange fees?

Is 3% foreign transaction fee a lot?

Foreign transaction fees generally range from 1 percent to 3 percent and tend to average around 3 percent of each transaction. Paying around $3 per $100 you spend may not sound that expensive, but these fees can add up if you're making a lot of purchases with your credit card.

Is it better to exchange money or use credit card?

While you'll always need some cash, using a credit card for your spending needs can significantly simplify overseas travel. You won't really have to deal with converting currency and, armed with the right credit card, you won't pay unnecessary foreign transaction fees.

Do credit cards give good exchange rates?

“The reason you get a favorable exchange rate with a credit card is the issuer is operating at much more scale and they're able to do a large volume of transactions,” said Greg McBride, the chief financial analyst at Bankrate, a personal finance site.

Is it better to exchange money at bank or currency exchange?

If you don't have time to get cash at the bank before your trip, it can be tempting to get foreign currency at an airport kiosk or currency exchange counter. These merchants offer convenience, but their exchange rates are typically much less favorable than your bank at home.

What is the cheapest way to exchange currency?

Do US banks give good exchange rates?

Generally, local banks or credit unions offer the best rates for currency exchange.

Which bank has no foreign transaction fee?

Discover® Bank

Discover doesn't charge foreign ATM network or foreign transaction fees. But Discover card acceptance can be limited outside of the U.S., Canada, Mexico and some Caribbean nations. With an HSBC Premier Checking account, customers pay no foreign transaction fees. HSBC also has a worldwide network of ATMs.

Where is the best place to exchange money?

Local banks and credit unions usually offer the best rates. Major banks, such as Chase or Bank of America, often offer the added benefit of having ATMs overseas. Online peer-to-peer foreign currency exchanges. Online bureaus or currency converters, such as Travelex, provide convenient foreign exchange services.

How much does Bank of America charge for currency exchange?

A Bank of America International Transaction Fee of 3% will apply when converting your currency.

How do you calculate currency conversion charges?

If you don't know the exchange rate, you can use the following simple currency conversion calculation to find it: take your starting amount (original currency) and divide it by ending amount (new currency) = exchange rate.

Why do banks charge for currency exchange?

In order to make a profit, banks and other money changers use different rates for buying and selling currency. The online rates you see are probably mid-rates - half-way between the buying and selling rates. Of course, just to be on the safe side, banks also charge commission on the transaction...

Does Visa or MasterCard have better exchange rates?

Does it really matter? Does this mean that you should always use a MasterCard card when you're overseas? All else being equal (leaving aside card fees/rebates/benefits), MasterCard does generally provide the best exchange rates for the cardholder.

Which bank is best for foreign exchange?

Is it cheaper to exchange money at airport or bank?

Though there may be a small fee if you exchange less than a certain amount, your bank or credit union will almost always be the cheapest place to exchange currency. You may be able to order currency at a branch location, by phone, or online to have it delivered to you or to pick up at a branch.

Should I exchange money before I travel?

Ordering currency from your bank before you travel is almost always better than using the airport currency exchange. Sally French is a travel rewards expert who joined NerdWallet in 2020. She previously wrote about travel and credit cards for The New York Times and its sibling site, Wirecutter.

Which credit cards give the best exchange rates?

Is Visa or Mastercard better for international travel?

Visa and Mastercard are the two largest card networks in the world, accepted in more than 200 countries and territories. Mastercard credit cards are more widely accepted internationally, while Visa cards tend to offer more benefits. But for most consumers, there is no practical difference between Visa and Mastercard.

What is the best way to pay in a foreign country?

Credit cards can also be a convenient way to make payments abroad, though they may not be accepted in all countries. If you know credit cards are widely accepted in your study abroad location, it is best to get a credit card that charges no foreign transaction fees as this will save you money in the end.