How do you avoid high credit card fees for purchases made in the US?

[bande]

Does anyone have any tips on how to avoid the high fees that credit card companies charge you for making online purchases in US dollars? My purchase was $965.60 US but posted as $1024 CDN on my credit card bill. This is substantially higher even after taking into account the exchange rate right now. Any ideas how to avoid this for future purchases I am making for our Florida trip? Thanks.

 

[SmilingGrump]

Some CC tack on extra fees for making foreign purchases and some will take the worst exchange rate in the billing month and apply it even if your purchase was made on a day with the best exchange rate. Talk to your CC company and bank and find one that doesn't do this.

 

[minnie56]

All credit cards assess a 2.5% service fee on the exchange rate which is the rate at the time the charge is posted to the account not the date of the transaction. That rates will always be in the banks favour!

Get a USD credit card and buy your USD when the rate is good and pay your CC that way. You control the rate that way buying when it looks good and suits you!

 

[CanadianPaco]

Get a USD credit card and buy your USD when the rate is good and pay your CC that way. You control the rate that way buying when it looks good and suits you!

That's what we did ! I also have a US bank account. I transfer $ into every week and especially when the exchange is in our favour. It builds up in no time.

 

[minnie56]

That's the plan!
I do that as well...I also transfer from my USD acct here into my USD in Florida and that way I can also use debit whilst stateside if I wish. I have a DD that lives in NY so I can pay her bills from there as well but that's another issue!

 

[EvangelineG]

But what if you don't often travel to the US, and are just making one WDW trip. Would you still recommend the USD account and credit card, or would something like traveller's cheques be better instead for just one trip?

Can't decide what to do for our upcoming trip, and also want to avoid that extra 2.5% on the CDN credit cards.

 

[Stan Solo]

I got a BMO US MasterCard for our trip this past summer. I sure was nice to get the bill and the totals are what they were when I paid for stuff. Not what the credit card company thought I should pay for stuff.

It's a no fee card as long as I charge at least $1000 per year on it. With online shopping and the odd trip south I don't see this being an issue for a few years.

 

[minnie56]

I can't help you with travellers cheques info...I haven't used in many years but if you don't go to the U.S often, not really much point in the CC and USD account.

I am sure someone here knows about TC more than I do..

 

[Disney Addicted]

I also have a US Visa and US savings account. I save money monthly for our next vacation. When it reaches a $1,000 (and hopefully a good exchange rate), I transfer it into the US savings account.

We don't travel to the States often (ie, 10-day trip last year. Perhaps a 1-day shopping trip next month, and a 2-3 week vacation next year) but it's nice to start putting the savings away. And because it's in the US account, I'm not going to spend it on stuff around here!

Any US purchases I need to make are done with the US Visa and paid back with funds from the US savings account. Even that is rare. I'm talking mainly deposits on a future vacation. Although last week I did purchase cruise credit (my mom's b-day present) for her upcoming cruise. And I will use the US Visa again in December to purchase another cruise credit for her & dad and my grandparents for their cruise as an early christmas present (as the cruise is 2 weeks before christmas).

I don't have an annual fee to pay on the US Visa so it works for us!

Hang on... what about Paypal? They don't charge extra money do they? I could swear I have made online purchases in the past for US amounts and Paypal has only charged me the current exchange - no extra fees. Although not every online company allows payment by Paypal.

 

[SmilingGrump]

For one time trips you can also purchase a pre-paid US Dollar Visa card or gift cards. Get whatever dollar amount you think you'll need and pay cash for them.

Traveller's Cheques used to be accepted everywhere. Now that's no longer the case and you may have to go to a bank to cash them (major stores and institutions still accept them). Visa, MC, Debit Cards, and Gift Cards have really replaced them and they're more convenient.

 

[bande]

I didn't think of Pay Pal until after I had booked my trip. I think that may have helped but I haven't used it for so long that I forget how it works. THink you are right that they only charge the exchange rate and then you pay you pay pal purchase with your credit card and don't get dinged for the 2.5% service fee. Does this sound right? Should have looked into this more before buying the airline tickets!

 

[Stan Solo]

Hang on... what about Paypal? They don't charge extra money do they? I could swear I have made online purchases in the past for US amounts and Paypal has only charged me the current exchange - no extra fees. Although not every online company allows payment by Paypal.

I didn't think of Pay Pal until after I had booked my trip. I think that may have helped but I haven't used it for so long that I forget how it works. THink you are right that they only charge the exchange rate and then you pay you pay pal purchase with your credit card and don't get dinged for the 2.5% service fee. Does this sound right? Should have looked into this more before buying the airline tickets!

I believe it's when you pay your Paypal purchases with your credit card that you get that 2.5% service fee, but I could be wrong it may be just the way I have my Paypal set up.

 

[bankr63]

Of course all of the major Canadian banks charge you a fee of somewhere around 2.5% when you exchange money at the counter. I did a quick survey of the majors a few months ago, and they were all pretty similar. So I still don't see the advantage of getting a US card. You still pay the percentage to the bank when you exchange your C$ to US$ to pay the card.

The best suggestion I saw here (there was a long thread on this about 6 months ago) was the guy who bought US$ from retail stores at a fair rate, thus getting greenbacks with no exchange. Both the retailers and the purchaser avoided the fee, so everyone comes out ahead (oh, except the bank).

 

[minnie56]

Well you may pay some fee to the bank but it won't be the rate they stick to you at time of posting to convert and there will be NO 2.5% fee assessed by the CC company!
Works pretty good for me..

 

[dennise]

I just got back tonight. I used travellers cheques, never had a problem using them, and cash. Visa only for rare purchases. When the TC's and cash get low, I know it it time to stop shopping.

 

[bankr63]

Well you may pay some fee to the bank but it won't be the rate they stick to you at time of posting to convert and there will be NO 2.5% fee assessed by the CC company!
Works pretty good for me..

That's what I am saying - it is a wash. If you use a bank CC, they are charging you exactly the same exchange rate that they charge at the counter on that day. And then they add a percentage fee on top, JUST LIKE THEY DO AT THE TELLER!! Assuming rates aren't fluctuating rapidly, you pay exactly the same amount on your CC as you do to change money at the counter.

Keep in mind that it is not the "Credit Card" company that does any of this - your bank licenses from Visa or MC, but the bank runs the program, and the currency conversion is done by your bank. (Visa and MC make their money from interchange fees charged to the vendors on the actual transactions).

Just remember, pretty much no matter how you do it, the bank will get their share... (kind of like the tax man).

 

[minnie56]

I understand..but with my account at the bank I get a preferred rate on the exchange so I do fare better than the CC. Trust me..I have worked it out many times!!!!

 

[coastgirl]

Hmm. I may need to look into this. One of the things that really annoys me is that if I return something I bought in USD, I get dinged the second time. So, I pay 2.5 cents more buying it, and lose 2.5 cents returning it. At parity, that's a nickel on every dollar. First saw it when I paid Disney a big deposit, then changed it when the rate dropped--but they cancelled my deposit and refunded it, then started over for the new deposit. Annoying. Returned some shoes to LLBean on our shopping trip in August, the same thing...at least if it were a credit on the card, it could sit there and not lose value.

 

[bankr63]

Hmm. I may need to look into this. One of the things that really annoys me is that if I return something I bought in USD, I get dinged the second time. So, I pay 2.5 cents more buying it, and lose 2.5 cents returning it. At parity, that's a nickel on every dollar. First saw it when I paid Disney a big deposit, then changed it when the rate dropped--but they canceled my deposit and refunded it, then started over for the new deposit. Annoying. Returned some shoes to LLBean on our shopping trip in August, the same thing...at least if it were a credit on the card, it could sit there and not lose value.

That's a great point and very true. But then I have never returned anything while traveling in the US. However, compared to the protection you get from a credit card, I don't know if it is worth it. If you lose money (drop your wallet, get pick-pocketed) it is GONE! With a credit card, they will remove charges for any purchases you did not make, cancel the card, and express ship you a new one in a day or so. I worked in banking (credit card div) and we did this every day, around the world.

What bothers me is that most people think the fees are usurious, without realizing they (most people anyway) are paying the same at the teller.

 

[seemefli]

The best suggestion I saw here (there was a long thread on this about 6 months ago) was the guy who bought US$ from retail stores at a fair rate, thus getting greenbacks with no exchange. Both the retailers and the purchaser avoided the fee, so everyone comes out ahead (oh, except the bank).

Just curious how that works?? What retailers in Canada will give you US $$ (okay not give but allow you to buy ). Ive never heard of that before?? Do you have to buy something from the store and then do a cash back sort of thing?? Maybe only ones that are close to the US border?