Credit cards charges on travel transactions

Using credit cards in a foreign country is a growing trend among those who travel. It is reported that some 70% of people who travel now use credit cards at some point during their travel. Given the immense convenience that they offer people who travel, it is not hard to see why the practice of using credit cards during travel is widespread.

But, before using credit cards for travel, consumers should do their homework. Providers do levy charges at account holders who use them for foreign travel transactions. Charges for foreign travel transactions can be quite hefty, and may come as a surprise to account holders when they return from their travel.

A recent report revealed that as many as 90% of people do not know how much the credit cards companies are going to charge them for their travel transactions. The same is true of people who use them to withdraw travel cash from ATMs when they travel. As many providers vary their charges on travel transactions from time to time, knowing how much providers charge and then switching to cheaper cards for travel could save people who travel a lot of money.

Credit cards charges for foreign travel transactions

Basically, there are three credit card charges made on foreign travel transactionsl. However, if consumers are not withdrawing travel cash from ATMs then consumers will only be subjected to one of the charges.

The three charges that people who travel should watch out for are:

1) Interest charges on travel cash withdrawals : Consumers who withdraw travel cash from ATMs will accrue interest charges on their account for the amount of travel cash withdrawn. These interest charges normally kick-in immediately - although this practice varies between provider. The interest rate on travel cash withdrawals varies also, but is generally around 1.5% per month on the amount of travel cash withdrawn.

2) Foreign currency loading for travel transactions: Withdrawal of travel cash from ATMs along with travel purchases are subject to a foreign currency charge. This charge is levied by providers at consumers who travel for the privilege of using their cards during travel. All travel cash withdrawals and travel purchases made attract this travel transaction charge, which on many cards is around 2.75% of the travel transaction amount.

3) Credit cards handling fee on travel cash withdrawals: The final charge on travel transactions is a handling fee for withdrawal of travel cash at ATMs. Providers charge around 1.5% on the amount of each travel cash withdrawal via credit cards, although this can sometimes be as much as 2% per travel cash withdrawal.

Using credit cards to withdraw travel cash can be an expensive business for people who travel. However, if account holders who travel are prepared to accept charges of 4.75% per travel cash withdrawal, and 1.5% month interest rate on travel cash withdrawals, then these are likely to be the best way to obtain travel money when abroad.