What Language does Your Wallet Speak?

Your credit cards APRwill not vary depending on where you shop, but fees will. Currency exchange rates can be one of the biggest headaches for you, especially if you love the shopping selection of the Eurozone. For example, as of August 2014, the purchasing power of the American dollar in Europe has been consistently 30 percent less. Luckily however, the dollar remains strong in many Asian countries. But let’s face it, unless you are a titan of industry, there is little you can do to influence world economic events. So why not influence the events of your wallet instead? By using a credit card with no foreign transaction fee, you can at least save on the 3% conversion fees that many banks and institutions normally charge for these international purchases. This means that credit cards APR is not the only thing that matters – look at fees too.

Credit cards you may want to consider are those that offer no conversion fees along with cash back rewards – all the more moola for you to spend on future purchases! One such card is the Capital One Quicksilver Cash Rewards credit card, which gives you unlimited 1.5% cash back on every purchase. This card gives you a $100 bonus after you spend $500 on purchases within the first three months, making it an ideal choice for the online shopaholic. Another option is the Discover it Chrome credit card, which offers 1% cash back on online purchases, and 2% cash back up to $1,000 in combined purchases at restaurants and gas stations every quarter. That means you’ll rack up even more savings when you show off your new French outfit while going out to dinner.

If you don’t want to get a credit card with no foreign transaction fees, another option for you is to make sure the web site you are using gives you the choice to change your currency settings. Web sites for major European brands like Burberry and Zara use an automatic default to the correct currency by using a home page with country selections. But if you end up on a smaller web site, double check to see if you have the option to change to pricing in USD.

Don’t forget shipping fees!

While you may save through buying in your own currency, or by using credit cards with no foreign transaction fees, don’t forget that those savings could get eaten up in international shipping charges. One way to bypass this is to look for sites where international shipping is free. Below are a few places to check out. Happy online shopping!

• The Asos Marketplace has a vast selection of indie boutiques and vintage threads from around the world. It’s a great way to explore the nooks and crannies where fashion is moving forward. This site also allows you to set your payment settings to USD, and prefers Paypal, which can be funded with your credit card.

Marketplace.asos.com

• Japan Shoppers is the premier web site for all things related to the Land of the Rising Sun. Used by half a million people in a 120 countries around the world, this site is a hot place for international shopping.

Jshoppers.com

• Need some electronics? Deal extreme is the place to go go get your gadget. This web site also offers the choice of paying in USD.

dx.com

How Credit Card Companies make Money

Now you know that one way credit card companies make money is with foreign transaction fees and other fees for processing payments – it’s not all about credit cards APR and annual fees. Armed with this knowledge you can make better decisions about what’s in your wallet.

Do I need a smart chip-enabled card?

Here in the USA, our credit cards are literally “attractive” ways of doing business. With their old-school magnetic strip, our domestic cards have used this “swipe and sign” system for years. But in Europe and many other parts of the world, a more secure hi-tech system is in play. This smart technology is called EMV (Europay, Mastercard and Visa), and is fast becoming a global standard for credit cards purchases both big and small. Featuring an integrated chip, these cards are quickly being adapted under names such as “IC Credit” and “Chip and PIN.” If you travel in Europe a lot you may need to make this chip part of your credit card comparison for travel.

According to a 2013 report by EMVCo, which keeps statistics on EMV adoption, EMV systems are most prevalent in western European countries such as France, Spain, Germany, Italy, and the United Kingdom. This means if you are traveling with just a magnetic-strip card, you might run into problems making point-of-sale purchases at local shops and train ticket kiosks. According to EMVCo, the lowest EMV adoption rate is in Asia and the Pacific, which includes countries like Australia, India and Japan.

Although the United States has been slow to use EMV technology, hope is on the horizon. In August 2014 the Payments Security Task Force, which represents the U.S. electronic payment industry, projected that more than 575 million cards with chip security will be issued in the United States in 2015. Will you be one of those people? Three cards you can start looking at now are the Chase Sapphire Preferred Card, the BankAmericard Travel Rewards Credit Card, and the Barclaycard Arrival Plus Worlite MasterCard.

Credit Card Comparison for Travel: What system works best for my areas of travel?

When considering world-wide acceptability, it’s important to know that Visa and MasterCard are the most universal systems. When it comes to credit card comparison for use abroad certain credit networks involve merchants around the world, financial companies, and regular consumers who obtain Visa or MC-branded products directly from banks and other institutions. This means an expansive global presence for both brands. According to creditcards.com, both Visa and MasterCard can be used in more than 25 million locations in 170 countries. Visa’s network is a bit larger, with 200 countries and territories accepting the card, according to the company’s “Global Presence” web page.

Another kind of credit system involves brands like American Express and Discover, which issue their own cards and handle all processing in-house. While fewer merchants and countries accept these cards, Discover has been identified by many bloggers and forum posters as one of the best cards for people traveling in China. This is due to a reciprocal contract with UnionPay, China’s main card-issuing bank. Discover, which by design never has a foreign transaction fees, is also accepted widely in other Asian countries such as Singapore, South Korea, Taiwan, the Philippines, and Thailand. So if like a modern Marco Polo you plan to go east in your travels, a Discover card might be the wisest thing for you to pack.

Some helpful links

If you want to learn more, here are some links for MasterCard and Discover.

1.Master Cards

2.Discover Cards

Car Rental Coverage – Key Choices Before They Hand you the Keys

There are various types of insurance coverage when you rent a car abroad. “Collision damage waivers” (CDW) are easily purchased through a car rental agency, but can often be expensive. You could also opt to get collision insurance as part of a comprehensive travel insurance policy. The best affordable option however, is to use the free or low-cost coverage provided by your credit card company. These coverage plans are divided into “primary” and “secondary” coverage.

Nearly all credit card companies offer secondary coverage, which acts as a supplement to your own personal auto insurance. But keep in mind that most personal car insurance plans don’t cover international driving, and even if they did, would you want to risk increased chances of an accident in a land with different road rules, speed limits, and even driving lanes? No one wants higher premiums! If you are considering renting a car in another country, look into paying with a card that offers primary coverage, so that way you’ll be protected from higher premiums should bad luck strike along the way. Be sure you understand how credit card transactions work as relate to insuring your rental.

If you use American Express cards, you might want to look into the company’s Premium Car Rental Protection Program, which charges a flat rate of $24.95 per vehicle rental for up to 42 consecutive days. Enrollment is free and there is no deductible, with up to $100,000 in primary theft and damage covered (liability not included). Generally, American Express does not offer many cards with no foreign transaction fees. Two exceptions have traditionally been the high-end American Express Platinum and Centurion card, but these top-shelf products are out of reach for many people. Fortunately, as of May 2014, users of consumer and business Delta SkyMiles credit cards can also now access a waiver of foreign transaction fees. The road ahead is looking clear!

Behind the Wheel for Business and Pleasure

Other credit cards that incur no foreign transaction fees and offer primary auto insurance include the Citi Thank You Premier Card, the United MileagePlus Explorer, the Fairmont Visa Signature card, and the Discover Escape Card. And if you’re traveling abroad on business, you might want to consider the Chase Ink Plus or Chase Ink Bold cards, which both offer primary insurance coverage if the car rental is used for business purposes. The Chase Ink Plus was also named by Money Magazine in October 2013 as the best credit card for Travel Rewards for Small Business, so if you’re the type of person who logs lots of miles in your business dealings, think about chasing down this deal. Another option is the Mariott Rewards Premier Business card, whose plan offers reimbursement for theft and collision damage up to the actual cash value of the car. All three cards are offered through Chase.

If you wonder how credit card transactions work as relates to rental cards just be careful. Don’t take your auto rental insurance coverage lightly. Do a thorough review of your choices, and talk to your bank or credit card company to make the decision that is right for you. For some additional tips, check out the sidebar below.

Sidebar

How Credit Card Transactions Work: Foreign Car Rentals and Credit Card Insurance – Some Tips

• Talk to your credit card company and get specific information on countries where the insurance will and will not apply, and other details such as rental days covered, eligible vehicle types, maximum reimbursement, and if theft and loss are covered. Ask for a “Letter of Coverage” and take a hard copy with you to the car rental service.
• Just owning a card with this rental coverage feature is not enough – you’ll need to actually use your card when you book and pay for your rental. This is an important part of credit card fees overseas and usage that you need to be aware of. Also, if your credit is low, consider using this one card exclusively just for the rental. That’s because if you decline a CDW, you are liable for the deductible and some car rental companies may put a hold on your credit card equal to the car’s value. This could put the brakes on your spending plans!
• If possible, try to rent from an American-based company. Should you need to file a claim, dealing with the matter domestically can save you a lot of headaches.
• Generally, in order to use your credit card insurance benefit, you need to decline the CDW. Avoid signing any rental contracts until you have confirmed with the rental agency that you are turning their coverage down.
  Primary rental car insurance via credit card only works when there is damage to the car or theft. If you damage other cars, property or people, you’ll have to fork out the cold cash and pay. Consider augmenting your coverage with other liability plans.

Visa

Visa as a credit card company does not issue its own cards, but rather works with financial institutions that provide Visa-branded products to consumers and businesses. As such, it means that with credit cards APRis determined by the bank. It is also often your issuing bank that will determine the daily exchange rate for your specific country of travel. According to Visa’s web page, the company still calculates its own rate using wholesale markets or government rates. It then shares this suggested rate for the following day with its financial partners. Banks will adjust the rate depending on currency conversion fees and other factors. So on any given day, banks like Capital One, Chase, and Bank of America will all have a variety of currency exchange rates.

Benjamin Franklin said that a penny saved is a penny earned. So when you ask how tomake money on credit card purchases part of the answer is to save money by not paying FTFs or interest. When you choose credit cards APR is just one thing to compare – look at transaction fees as well.

One tool that might help you is an exchange rate calculator that Visa offers on its web site. The calculator allows you to compare your dollar with more than 150 currencies, and is also useful because it includes a field where you can add any bank fees to enable an accurate estimate.

To use the calculator, visit:

Exchange Rate Calculator

MasterCard

Users of MasterCard will find a similar system for currency exchange rates. Like Visa, the company uses many market sources to determine its exchange rates. MasterCard’s web site provides you with a currency conversion tool where you can set your base currency, although its selection of more than 40 foreign currencies is not as comprehensive as the Visa calculator. The tool will then give you a chart with calculated rates for these 40+ currencies. You can even print up this chart as a PDF. Unfortunately, these rates do no reflect any markups by issuing banks, and the shelf life of the chart is pretty short, given that exchange rates fluctuate daily.

To try out the currency conversion tool, visit:

Currency Conversion Tool

It’s important to also note that an exchange rate is not necessarily applied on the same date a transaction takes place. Merchants process your purchases at different times, so you will likely be charged a different rate (for better or worse) once your transaction is posted to the Visa or MasterCard system. MasterCard identifies this different day as the “settlement date,” so keep this in mind when using any currency conversion tool.
Another issue to keep in mind is that credit cards like MasterCard do not supply the exchange rate if a merchant converts the currency for you at a point of sale. This system is called Dynamic Currency Conversion. You should keep your eyes out for these situations.

What is Dynamic Currency Conversion?

Dynamic Currency Conversion is a method in which a merchant converts the cost of your transaction back to your local currency. DCCs take place at many points of sale. There are both pros and cons to this method. On the surface, it may seem convenient to you, because as a cardholder you can immediately view and understand how much an item will cost in dollars. But convenience can be expensive. The exchange rate is essentially at the discretion of the merchant, so DCCs lend themselves to higher markups. You are more likely to find a favorable exchange rate through your credit card company than through a DCC. Many travel experts advise against using this system if you can.

With Credit Cards APRis not all that Matters

Here are some guidelines to finding the best conversion rates:

So what are the best bank credit cards to look out for if you want to get the most value for your money? It’s a complex answer: with so many banks, currencies, and world economic events, you’ll have to do a little digging to find the situation that best serves you. But with an understanding of some key trends, you can get a jump start on the effort.

In a 2014 Currency Exchange Study by cardhub.com, researchers analyzed exchanges rates for the Euro as of May 2014. Capital One placed first for the best rate, listed as $1.4341. This data matches anecdotal evidence for Capital One, which is often mentioned as a good choice by credit card bloggers and forum posters. Capital One Visa products with no foreign transaction fees include the Capital One Venture Rewards and VentureOne Rewards credit cards. Also placing high on the study’s list of good Euro exchange rates was Bank of America at $1.4692. If you are interested in doing business with Bank of America, the bank offers a BankAmericard Travel Rewards credit card, which is also a Visa Signature product that carries no foreign transaction fees.

So in a nutshell, while one credit card network may have slightly better rates, you need to consider the exchange practices of your issuing bank. Regardless, you will still save big compared to Dynamic Currency Conversion, or to the corner kiosk that will buy your dollars for a lower-value price.