Tip: Get A Credit Card That Doesn't Charge An International Currency Conversion Fee.

It can save you quite a bit if you make international purchases regularly.

How?

Both Amazon and ebay (and presumably other retailers) skim off the top when converting from other currencies to the U.S. dollar (and presumably in the opposite direction as well), so using their systems to charge your credit card in U.S. dollars gets you a worse conversion rate than your credit card will, if you just charge in the native currency.

Now if your credit card company charges a currency conversion fee or international transaction fee, all bets are off (most credit cards DO charge for these things), but if you can find a card that doesn't charge for international tranactions or currency conversions you can cumulatively save quite a bit over time. I have an " Amazon Visa" (not the same thing as the Amazon Store Card) that I only use for international transactions, as it doesn't charge a currency conversion fee.

Example from this evening: I made a purchase from a Canadian seller on ebay. The total was just over C$70. ebay defaulted to charging $55.71 in U.S. dollars. When I changed the options to charge in Canadian dollars to my Amazon visa card, the amount that hit my card was US$53.96, or a savings of just under US$2 on this one transaction. I know that doesn't seem like much, but it can add up over time.

By default, both Amazon and ebay will try to charge you in U.S. dollars so they get to keep that difference, so you have to take your time and doublecheck as you go through checkout.

I do enough international purchasing, not only through ebay and Amazon international sites, but also vendors like FNAC, JPC, Yvert, etc., that being able to charge in native currency has saved a ton of money over the years.

Good advice. It is my experience this is the cheapest option. However, it is not my experience there are no conversion fees.

Have you checked that your Amazon Visa card did not charge a hidden fee? As someone once said: 'There is no such thing as a free lunch."

Last week, I placed an order for tea with Twinings in the UK. The £ 141.91 was converted to € 168.92. Looking at the transaction details, they show a transaction fee of € 3.31. This is not a fixed transaction fee. The transaction fee is 2% of the amount and only charged on transactions in foreign currencies. They must provide transparancy and notify me of the exchange rate. They cannot hide their margin in an above-market exchange rate.

I do agree with most of what you write, but do not believe in altruism of financial institutions. When a credit card company does not charge a transaction fee, they, probably, charge a rate above market. Converting currencies costs money and the bank will not pay the commissions and administrative fees for you. If it does not show a conversion fee, it is likely the exchange rate is higher than the market rate. So, check if that service that does not charge a 'conversion fee' converts against a higher rate. If the conversion fee is fixed, it might be cheaper for larger transactions.

That 2% can add up. I always choose to charge amounts in the foreign currency (it took me some time to find out where Hipstamp had hidden it). The 2%, always is much cheaper than letting ebay, Hipstamp (Paypal), etc. charge me in euro. They never show the costs, just the converted amount.

Sandafayre (online auction out of the UK) had a nasty habit of providing me a service by letting me bid in GBP and sending me an invoice in Euro to be paid into a Euro account, saving me the transaction fee. It was cheaper than a bank transfer. It was much more expensive than the credit card surcharge of 2%. Now, they charge the amount in GBP against my credit card.

Might I recommend Bettys for tea? Sadly, I'm not sure that their Fat Rascals and curd tarts would still be in date after a trip to the Netherlands.

https://www.bettys.co.uk/tea/bettys-loose-tea

Yorkshire tea! Nice.

My compatriots have a nasty habit of dipping a tea bag thrice in a pot of heated water and pass it off as tea. Nowadays, everything is sold as tea, as long as it changes the taste of heated water by dipping it thrice in the pot.

Those fat rascals look quite nice.
Mine will be a strong brew that needs a drop of full-fat milk to make it drinkable. I have no objection to using tea bags. Loose leaf has better taste, but it is messier.

I fully agree with revenuecollector.
I travel a lot all over the world.
I have a Bank of America preferred credit card and my account is in USD.
This card does not charge a foreign conversion fee.( typical 2%).
Many places I have to pay they ask me charge in local currency or USD. I always select local currency and I learned that that is always cheaper than paying in USD. The dollar exchange rate is set by the merchant (in this case ebay) and is always between 2 and 5% higher.
I learned that the exchange rate via the credit card is ALWAYS cheaper than the exchange rate by the merchant, even if the credit card is a no foreign conversion fee card

Yes. That was one of the first things I did once I started using the card for international transactions. I did my research on the terms and conditions before applying for the card several years back, and then vetted the charges upon posting, scrutinizing them for secondary transactions. That's the ugly thing that some credit cards (and many bank debit cards) do: the initial transaction looks fine, but then 1-3 days later a secondary fee transaction is posted. Reconciling those can get ugly.

I'm sure they make their money on the vast majority of people who carry a large balance, as it is a very high interest rate card (over 20%), but I make sure to carry no balance (or at least a minimal one) on this particular card.

When checking what converstion rates are being used, I typically use https://xe.com/ucc as my benchmark.

I will say that the one place you can get bitten, and I don't know a way around it, is if you end up having to do a return or refund, and the currency rate has changed considerably between when you made the purchase and when the refund processes. Sometimes you win, and sometimes you lose...

revenuecollector, Thanks for the informative post!

Just another data point by way of illustration. Purchase today from Canadian seller on ebay.

Total amount to be charged: CA$201.04
PayPal converting to dollars: US$158.68
XE.com reference point: US$152.18
What hit my card charging in Canadian dollars: US$152.40

So a savings of US$6.28 on this transaction.

The difference between XE.com's conversion rate and what hit my card is small enough that it could be either (1) Chase bank uses a slightly worse conversion rate, or (2) it could just be timing and the normal real-time fluctuations. Nominal in the overall scheme of things.

27-12-2023

USDCAD (Bloomberg)

Low 1.3177
High 1.3219
Average 1.3200
Last 1.3208

Previous day 1.3195

I make the charge 1.31916 CAD to the USD. That is within the daily range. So an excellent conversion rate.

There are typically 2 foreign exchange charges when you use a credit card in a foreign currency transaction. A first charge (typically not broken out on your bill) that is included in the conversion rate applied by the credit card network (for example VISA) that runs around 1%. Remember the foreign exchange rate like on xe is the split between bid and ask on inter-bank transactions of millions of dollars. The credit card issuer (for example Bank of America, etc.) may add a second conversion fee typically 1% to 3% to your transaction. That fee may be broken out as a separate charge or included in the rate. Dynamic Currency Conversion (allowing you to charge in your home currency) can add even higher conversion fees. A "no foreign transaction fee" credit card typically means that the card issuer is not adding a fee, but you are typically still paying the credit card network fee. Some high-end credit cards rebate back the network fee.

Thanks for the "under the hood" breakdown. For those of us less savvy with the banking systems, is there a better or more accurate reference point to use for comparisons than XE.com?

There likely are more premium cards and methods that high net worth individuals can access for better conversion rates, but I come at things from a more everyman perspective, methods your average consumer/collector can access, as I don't have access to premium options.

I think XE is accurate, you just need to understand what the number represents. I used to use another webpage that would allow you to choose between interbank rate, credit card rate, retail rate but the webpage no longer has that tool (or at least I can't find it anymore).

I've paid attention to the credit card conversion fees for foreign travel, not for my occasional foreign currency stamp purchases. There are a number of travel webpages that recommend credit cards for foreign transactions, but the card terms and offers change rapidly, so the last thing I read is probably already outdated.