What are Credit Card Overseas Charges?

Applying for a credit card? Are you a frequent flyer? If yes, then make sure you are aware of the cash withdrawal fee and foreign transaction charges before applying for a credit card. The fee charges differ by 1 – 2% from card to card and bank to bank and you can learn all about it at loanbaba.com. Look for the one that applies minimal credit card charges and rates. Coming to currency conversion fees, there is nothing much we can do for they are wholly charged on Visa and MasterCard.

Due to an additional fee on foreign credit transaction, the end user is likely to bear costs of 5% - 6% on the same. There are two entities involved in the transaction that apply this fee. First is the issuing bank like ICICI Bank or SBI bank and the second one is the service provider like MasterCard or a Visa card.

Why we bear an additional fee

The reason of additional fee is the complementary costs included with the currency conversion. Further, there is a small profit margin kept by the bank and Master or Visa card that lead to an additional fee.

Following are the three core charges involved:

Foreign currency conversion fee

Now that you own an Indian credit card, your balance is, of course, in Indian currency. When making a foreign transaction, say $50, then a currency conversion charge shall be an added fee. 1-2% fee is applied to the Mater or Visa card. Anything excess charged to the same is the profit margin kept by the bank.

Foreign transaction charge

An additional foreign transaction charge is applicable no matter what the currency, trade value, credit providers are which makes up a figure of 2.5% to 3.5% of the total transaction value.

Advance cash fee

We know, cash advances are costly in our country. Thus, using a credit card overseas will automatically increase the fee on the amount you withdraw. Thus, a fee ranging from 1 – 4% is charged each time you transact overseas. Moreover, there are additional costs known as the standard cash withdrawal rate on your card along with international cash withdrawal fee.

Currency conversion rates on the transaction date

The exchange rate on the transaction is based on the rate during the day of settlement, i.e., the day that Visa or MasterCard will determine to settle the transaction incurred between the issuer and the acquirer. Thus, the settlement date is different from the actual time of the transaction.

Do not worry if your calculations differ from the actual calculations because the transaction might have been posted to MasterCard or Visa 1-2 days later by the merchant. Visa and the MasterCard calculate the exchange rate in one day advance and applies the same rate to each and every transaction throughout the day.

How to find information on these charges?

To avoid shocks at a later stage, it is always recommended to be aware of the costs that'll be applicable on your credit card transactions. You can find information related to foreign currency conversion fee on MasterCard and Visa websites. Make sure you are updated with the latest rates before you travel. Also, visit the customer care of the bank to know data of Cash Advance Fee and Foreign Transaction Charges before packing your bags. These charges fluctuate at regular intervals.

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