Paying a 3% surcharge when using your credit card internationally? Well that sucks. Here’s how can pay no foreign transaction fees in 2012.

Credit card companies charge a 2% to 3% fee because they claim it’s necessary to help cover the costs of the currency conversion. That excuse is a crock! The currency conversion takes place within 24 hours, so it is highly unlike they would lose (or gain) 2-3% percent during the process. This fee is obviously a big money maker for them.

Fortunately, there are a few ways you can reduce – or even eliminate credit card foreign transaction fees:

Best cards with no foreign transaction fee?

#1 – Chase Sapphire Preferred

Without a doubt this is one of the best credit cards to have for traveling. You earn an unlimited 2x points on travel, 2x points on dining, and 1x on everything else. You can redeem your points for almost anything (including cash back) however the best way to use them is for air/hotel because Chase gives you 25% more value that way. For example 10,000 points = $100 cash back – or – $125 towards air/hotel. Oh and that foreign transaction fee? It’s a big zero! Go here to read the full review.

#2 – Capital One Venture Rewards

Out of all the major players in the credit card world, Capital One is the only issuer that hasn’t succumbed to charging foreign transaction fees. It seems like something too good to be true… but it’s not. This of course makes them a top choice for international usage. And without a doubt their best cards for travel are the Venture (avail in 2 versions).  Go here to compare the Venture cards side by side.

#3 – Citi ThankYou Premier

The card was launched a little over a year ago and packs a lot of benefits. It does have a drawback in that it is more expensive than the others above; the ThankYou Premier is $125 per year. However this is one of my favorite no foreign transaction fee credit cards because of the “Flight Points” program – you earn 1 point per mile flown. So let’s say you flew from Los Angeles to London. By my calculations that’s around 5,400 miles one way (so let’s say 10,800 roundtrip). With this card you would earn 10,800 points for that flight. See my full review of the card here.

#4 – American Express Platinum

If you want a high-end travel credit card with no foreign transaction fees, then AmEx Platinum is in a class of its own. If you don’t travel much, it won’t be worth it because of the $450 membership fee. However you may be surprised to learn that for even the occasional traveler, the value of the benefits can trump the fee many times over. For example, you get over $450 worth of benefits every time you stay at 700+ high-end hotels across the globe (get free room upgrades, food/drink/spa credits, etc). This is why its a favorite not only for foreign travel, but also domestic. Simply put, you won’t get these perks with any other card. Here is my detailed review of the American Express Platinum.

#5 – Marriot Rewards Premier

Back in 2011 Chase and Marriott decided to improve the credit card program and now, it’s one of the best out there if you regularly or occasionally stay at Marriott properties. With it you get 5x points at Marriott, 2x points on airlines, restaurants, and car rentals, and 1x elsewhere. There are quite a few benefits including the no foreign transaction fee. To view the review and bonus offer go here.

Honorable Mention – Discover Cards

Last year Discover decided to drop the foreign transaction fee on all of their credit cards. The only reason I’m leaving their cards out of the top 5 list is because their international acceptance is poor in most regions. However they’re an excellent (actually, the best) choice for the following countries:

• China: Because they’re accepted everywhere China UnionPay is, Discover is actually the most widely accepted credit card in China.
• Japan: Can be used anywhere that takes JCB (which is the largest card network in Japan)
• South Korea: Use anywhere that takes BC card (South Korea’s largest card network)

Even though Diners Club is now a dud in the United States, they’re still quite popular in some South American and European countries. Since Discover bought their int’l payment network 4 years ago, you can now use your Discover card at any foreign merchant that accepts Diners Club.

The best travel cards from Discover are the Escape ($59 annual fee, 2% rewards) and the Miles (zero annual fee, 1-2% rewards).

Cards with lowest foreign transaction fees? (that aren’t zero)

Most credit cards charge 2-3% for this fee. But just to give you an idea of how they compare, here’s a list – ranging from the highest to lowest – of what each issuer normally charges for the majority of their cards (obviously the above 5 cards are exemptions):

3.0% fee for Bank of America Visa & MasterCards (their AmEx versions charge 1%), Citi, Chase, HSBC, US Bank, Wells Fargo, Fifth-Third Bank, Barclaycard.

2.7% fee for all American Express cards (excluding the Platinum)

2.0% fee for Comerica, PenFed Credit Union (excluding their Promise card, which charges zero)

1.0% fee for USAA, Navy Federal

I guess it’s a stretch to label the 2% and 2.7% as “low” fees, but they are lower than the vast majority of cards, so they’re at least worth mentioning in case you don’t plan on applying for a new credit card right now and want to continue using the least painful option that’s currently in your wallet.

As someone who has lived in the United States my entire life, when a reader sent me a question asking which credit cards are accepted in Australia, I knew that I could give a pretty good answer but not provide the kind of in-depth information that a native Aussie could. Fortunately, I happen to have a buddy from there (who is also a fellow credit card blogger) and passed the question off to him… this is probably the 4th or 5th guest post ever accepted in the 3 year history of the CreditCardForum blog!

It can be the journey of a lifetime making that special trip Down Under: getting prepared for the long-haul flight, packing clothes and reading up on Australian slang so not to confuse a ‘dag’ with a ‘dill’. It also pays to know how American credit cards fare in the land of koalas and kangaroos.

1. Accepted in Australia

MasterCard and Visa are both widely accepted in Oz, as they are all around the world. Diners Club cards have an agreement with MasterCard so they can be accepted at nearly 25 million locations worldwide. But what about American Express, the credit card so synonymous with the USA that they account for 24% of the total dollar volume of credit card transactions in the US? There is limited acceptance of AmEx in Australia; the company tends to charge retailers more to accept their service, which puts a lot of businesses (particularly small family owned operations) off the idea of accepting them. If you have a Discover credit card, leave it at home. It is not accepted in Australia, although they are working on it.

2. Not Accepted in Australia

Australia is similar to the USA in that credit cards are generally accepted in most locations, although you might find your card being refused by smaller retailers. Check beforehand, by either looking for signs or asking the store assistants. Smaller hotels and guesthouses may not offer credit card facilities and other places listed that sometimes don’t accept credit cards include some restaurants, cafes, fitness clubs and even tattoo parlors. There are some taxi companies which don’t accept credit card payments either (not even Visa), so be aware of how to pay for your services or products.

3. Fees

It is common for credit card issuers to charge from 1% to 3% for purchases made in other countries. If you are using your credit card for every purchase whilst on vacation these charges can quickly mount up. Use a card that offers a low currency conversion fee or even one that has 0% on foreign transactions, like the Chase Sapphire Preferred. Capital One has a number of cards which don’t charge foreign transaction fees and the VentureOne offers miles as a reward, handy if you want to check out Tasmania or New Zealand whilst visiting Australia. Another credit card which has no foreign transaction fee is the HSBC Premier World MasterCard.

4. Store Charges

Generally, you shouldn’t get charged extra for making a purchase in a store if paying with a credit card. However, there are some stores which will charge you for using this payment method, so look for signs warning that charges will be made or ask the cashier before using your card. There have been reports of some places charging up to AU$3 (~US$3.18) just to use a credit card to pay for goods or services.

5. Crime

Credit card fraud costs the main credit card issuers over $1 billion a year in the US alone. One method is called skimming: a device reads the magnetic strip on the card whilst the user is at an ATM. Hidden cameras record the security number being typed in and that’s all a fraudster needs to start accessing an account. Avoid ATMs that look like they have been tampered with and make sure you shield the keypad with your hand when keying in your PIN. Australia has dated card technology and this has been exposed by Eastern European criminal gangs who know how to exploit this situation. You can improve your security by applying for a card such as the JP Morgan Select visa signature credit card. This card has extra security features and is ideal for using in Australia as it has no foreign transaction fee.

Tips for Using Your Credit Card in Australia

Here are a few tips gleaned from CreditCardCompare.com.au’s (an independent comparison website based in Australia) learning centre.

• Before you leave, contact your credit card issuer and inform them about your vacation plans. Irregular spending in a foreign location can set off security measures which temporarily lock your account.
• Shop around credit companies before you leave. Try and find a card that has a 0% or low foreign fee rate.
• Consider taking a prepaid debit card in case your credit card is not accepted.
• Try not to withdraw cash from an ATM with your credit card if you can, to avoid cash advance fees.
• Check the exchange rates. If paying in Australian dollars works out more economical than US dollars, then don’t be fooled into paying in US currency.
• Have your passport with you when making a credit card payment.

This post was contributed by Andy Boyd who is a Co-Founder at CreditCardCompare.com.au, one of Australia’s top comparison websites for credit cards, where he has critically reviewed over 100 cards.

As you are well aware, last night our country’s debt was downgraded from AAA to AA+ by Standard & Poor’s, who is considered to the leader for sovereign debt among the big 3 credit rating agencies. I am already receiving emails and messages are being posted on the forum asking what this will mean for credit cards. The truth is no one knows, not yet at least. This is the first time in history U.S. sovereign debt has ever been anything below the highest rating.

At this point in time, it’s a wait and see game to find out what happens next. There are those who shout calamity, and others who feel higher interest rates are unlikely. On the bright side (if there is such a thing in times like these) the U.S. debt situation may be ugly, but the consensus seems to be that it is the least ugly among the sovereign debt alternatives. After all, no one wants to park money in the euro given what we’ve been seeing in Greece and Italy. So there’s no denying this downgrade is a major blemish to our country’s reputations, but hopefully, the realized economic impact will not be as severe as many have predicted.

As to how this will play out with your credit cards, I will keep you in the loop over the coming days and weeks as to what happens.

August 6th, 2011

Q: Is credit card life insurance a scam or not? It is offered on my Chase and Bank of America credit cards.

A: Life insurance pays out cash to a beneficiary when the policyholder dies… that is not what credit cards offer (at least not in the traditional sense). However, there are a couple quasi-life insurance services offered by credit card companies. You didn’t specify which one you were referring to, so I will discuss both types:

Travel Accident Insurance

This is offered on many major cards nowadays. In fact, I frequently see it listed as a benefit not only on premium credit cards, but also many of those which have no annual fee. However to call this credit card life insurance would be incorrect, because it only covers cardholders in very limited circumstances.

Generally speaking, this benefit only kicks in when a cardholder has purchased eligible travel using their credit card. What constitutes “eligible” travel you ask? Well, the exact rules and restrictions will vary by card, but all of them usually have one thing in common and that is they only cover eligible travel during Common Carrier Conveyance – that’s an insurance term used to reference a ticketed passenger on a plane, ship, bus or plane (but consult your credit card company for their exact definition).

In the event you are a ticketed passenger traveling via the aforementioned, if you are killed or dismembered (loss of limbs) then the insurance will kick in, assuming the trip qualifies according to whatever the credit card company’s rules may be. For cards that offer this, the death benefit is usually anywhere from $100,000 to $500,000 (paid to your heirs) and the dismemberment benefit will probably be a fraction of that.

Worth it or not?

It’s typically a free cardholder insurance benefit so I don’t see how someone could argue it’s not worth it. That being said, the odds of ever using it are very slim (it’s highly unlikely you will die in a passenger plane crash or train wreck!). Regardless, it wouldn’t hurt mentioning this possible benefit in your will, so in the very unlikely event it does happen, your heirs will remember to make a claim for it.

Credit Card Payment Protection Insurance

Most major credit card companies offer this fee-based add on, including American Express, Discover, Citi, Chase, Bank of America and others. Although they each have their own rules, they are very similar to one another – when the benefit kicks in during a covered event, interest will stop accruing and minimum payments will not be required.

Examples of covered events may consist of one or more of the following, depending on the bank:

• Job loss
• Medical disability
• Life events such as marriage, baby, etc.
• Death of cardholder

In the event of cardholder death, there are payment protection plans that will waive the balance on the account up to a certain amount; usually $10,000 or $25,000. Although some call this aspect of the plan credit card life insurance, that’s not what it is… the card issuer is basically paying itself, not anyone else.

Worth it or not?

For a cost of around 1% of your monthly balance, this is not a cheap add-on to have. It’s not a “scam” and speaking of the plan offered by Chase, theirs is actually a notch better than the other issuers. That being said, in my personal opinion, I think it is rarely worthwhile for the consumer to pay for these plans. To find out why I recommend reading this post about credit card payment protection insurance.

Q: I want to apply for a joint credit card account with my son in college to help him build credit. Is this a good idea or not?

A: I’m glad to see you are giving this some thought before submitting an application. There are some benefits to going this route – but at the same time – some big pitfalls you need to be aware of.

Pro: Helps build credit for the other person

Obviously first and foremost, the biggest benefit is that the person with insufficient credit history will have a chance to build (or rebuild) their credit using a credit card they might not qualify for on their own.

Con: It can hurt the person with good credit

With a joint credit card application, you are signing up for 100% liability (not half liability, as some wrongly assume). That means if the other person makes late payments or defaults on the account, your credit score will be harmed… just as if you did those same things on your own account. It doesn’t even matter who made the purchases – with joint credit cards both parties will be held 100% liable.

Pro: Doing this favor for someone may strengthen the relationship

Whether it’s your boyfriend or girlfriend, son or daughter, or a best friend – applying for a joint credit card is a favor they will certainly appreciate (at least they should!). In turn, there is the possibility that doing this may strengthen the bond between the two people.

Con: It very well might ruin the relationship

I can’t even begin to tell you the number of horror stories I have heard involving joint credit card accounts. You and your partner may be head over heels right now, but what happens if you break up later on? Your son or daughter may not intentionally mean to harm you, but using credit for the first time can be a learning curve where mistakes happen. The ugliest stories I’ve heard involve friends and ex-spouses, where out of spite or vengeance, they abuse the joint credit cards and leave the other person to pick up the pieces.

Pro: It makes approval easy

A joint account makes it easy for the person with bad credit to get approved for a credit card, regardless of their credit history.

Con: The easiest route isn’t always the best

Joint credit card offers may be easy, but that doesn’t necessarily mean they are the best route to go. There are other ways a person with no credit or bad credit can get a credit card on their own. If they are a student and new to credit, then student credit cards have very lax requirements. If it’s a bad credit history that is getting in the way, then there are secured cards to rebuild credit with 100% guaranteed approval and no joint applicant is needed. If the person doesn’t have amazing credit, but not horrible either, then there are offers for fair credit that have more lenient qualifications. All of these options allow the person to get a credit card without someone else.

Should you or shouldn’t you?

The person with the good credit obviously has the most to lose, so the decision should be entirely up to them. From my experience running this forum, I would advise against it more often than not.

The person with bad credit may say “If you love me, you will do it” or “If you are my best friend then you will trust me” but both of these arguments make zero sense. Why? Because if you truly do love someone or are their best friend, then you won’t risk your good relationship by letting money get involved and muddling things up.

How to make both people happy

The reason you want to do this is to build/repaid credit, either for yourself or the other person, am I right? If that is the goal, then here’s a way you may be able to accomplish that, without risking the relationship…

Technically there is no such thing as a joint credit card application, because when you apply only one person’s name can be entered on the application. So the person with good credit will first have to apply for a credit card alone and get approved. Afterward, they can call up customer service and add the second person’s name and Social Security to the account – when this is done a second card will be mailed out with the other persons’ name on it.

At this point, whether or not that second card is physically given to the other person doesn’t really matter. Their name and social is already on the account and it will be showing up on their credit report. The information reported to the credit bureaus will be the exact same for both parties, even if one person doesn’t use their card. So as long as the primary applicant uses their own card, that activity will still be showing up on the other person’s credit file.

This is a great way to go because it minimizes the risk (and possibly saves the relationship) since the other person will never have possession of the card… yet their credit will still benefit anyway.

How to apply?

As mentioned, the person with the good credit will first need to apply for a card on their own. After they are approved, they can contact customer service and add the other person’s info to the account. So the first step will be to pick out a card and apply. Check out these reviews to get started:

highest rated credit cards