Say Goodbye to High Fees: 5 Money-Saving Tips for Overseas Payments

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Have you ever had this experience: whether swiping your card freely while traveling abroad or shopping online for your favorite items from home, you happily check the bill only to find some “unexplained” extra charges? These annoying additional costs are usually hidden expenses like currency conversion fees or foreign transaction fees. They unknowingly increase your spending, making what was originally a good deal no longer so great.

Most credit card issuers charge 1% to 3% fees on every foreign transaction. This means that for every $1,000 you spend, you may have to pay up to $30 in handling fees.

Mastering some simple money-saving tips can make you more at ease when paying overseas. The chart below clearly shows the standard foreign transaction fees charged by some major card issuers, giving you a more intuitive understanding of these hidden costs.

Key Points

• Choose credit cards with no foreign transaction fees to avoid the extra 1% to 3% costs.
• When spending abroad, insist on paying in the local currency to avoid unfavorable exchange rate traps.
• Use UnionPay cards to withdraw cash at ATMs that support UnionPay to reduce exchange rate losses and fees.
• Stack credit card cashback, payment platform discounts, and cashback websites to maximize savings.
• Open a multi-currency account to manage multiple foreign currencies at low cost and effectively avoid exchange rate risks.

Tip 1: Clever Use of Zero-Fee Credit Cards

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To combat high fees, the most direct money-saving tip is to start from the source: choose a credit card that does not charge foreign transaction fees. This allows you to avoid the extra cost that is usually between 1% and 3% when spending.

Identifying Foreign Transaction Fees

First, you need to understand your enemy—Foreign Transaction Fee. When you use a credit card overseas or on foreign websites to make transactions in a non-local currency, many banks charge this fee. This fee usually accounts for 1% to 3% of your total purchase amount. This means that for every $1,000 spent, you may have to pay an extra $30.

The chart below visually shows the foreign transaction fees charged by some major card issuers, giving you a clearer understanding of this hidden cost.

How to Choose All-Currency Cards

There are many “zero-fee” or “all-currency” credit cards on the market designed specifically for travelers and online shoppers. When choosing, you can focus on comparing the following aspects:

• Fee Structure: Confirm whether the card truly waives foreign transaction fees. Also, pay attention to whether there are annual fees, withdrawal fees, or inactivity fees.
• Supported Currencies: Check if the currencies supported by the card cover the countries or regions you frequently visit.
• Exchange Rate: Understand whether the exchange rate used by the issuer is the real-time market rate or has an additional markup.
• Security and Service: Choose cards with chip technology, fraud monitoring, and good customer service to ensure safe use.

Little Tip: Some credit card networks (such as Mastercard) have official websites that provide tools to help you find and compare no-foreign-transaction-fee credit cards issued by their partners.

Application and Usage Notes

Applying for such credit cards usually requires meeting some basic conditions. Although requirements vary by bank, the following are generally examined:

• Good Credit Score: Usually requires a solid credit history.
• Personal Information: Provide identity documents such as name, address, and social security number.
• Income and Asset Proof: The bank needs to assess your repayment ability.

Before applying, be sure to carefully read the terms and confirm all fees and benefits. Once successfully applied, this card will become a powerful assistant for your overseas spending.

Tip 2: Insist on Choosing Local Currency

When you are excitedly swiping your card abroad, the cashier may enthusiastically ask you: “Would you like to settle in USD?” This sounds convenient, but it is actually a hidden “exchange rate trap.” Mastering this money-saving tip can help you avoid unnecessary losses.

Avoiding the DCC Exchange Rate Trap

This trap is called “Dynamic Currency Conversion” (DCC for short). When you use a non-local credit card, POS machines that support DCC will detect which country your card is from and offer you an option: pay in your home currency (such as USD).

The operation process of DCC is roughly as follows:

1. The merchant’s POS machine detects that your card is a foreign card.
2. The system automatically provides an amount settled in your home currency.
3. This amount includes the exchange rate set by the service provider and additional markups.
4. You need to choose on the screen whether to pay in “local currency” or “home currency.”

This option not only appears in stores but may also be encountered when withdrawing cash from ATMs.

Why Local Currency Settlement is More Cost-Effective

Choosing to pay in your home currency (i.e., using DCC) seems to save the trouble of conversion, but the cost is an extremely unfavorable exchange rate. The exchange rate markup charged by DCC service providers is usually between 3% and 12%, far higher than the less than 1% fee charged by credit card organizations (such as Visa or Mastercard).

For example, suppose you withdraw 200 euros from an ATM in France:

• Choose Local Currency (Euro): Your bank will settle according to the payment network (such as Visa)'s exchange rate, with a total cost of about $224.40.
• Choose DCC (USD): The service provider will settle with a poorer exchange rate, and the total cost may be as high as $240.72.

Just one choice can make you pay more than $16. Therefore, insisting on choosing local currency settlement is a key step you must master.

Operation Methods Online and Offline

Whether online or offline, the operation is very simple:

• Offline Card Swiping or Cash Withdrawal: When the currency selection appears on the POS machine or ATM screen, be sure to choose the local currency (for example, choose Euro EUR in France, choose Japanese Yen JPY in Japan). Do not choose your home currency (such as USD).
• Online Shopping: When checking out on overseas shopping websites, check the currency displayed on the payment page. If the website provides multiple currency options, please choose the local currency of the country where the goods are located for payment.

Remember this simple principle: Always choose to pay in the currency of the place where you are spending.

Tip 3: Make Good Use of UnionPay ATMs and Exchange Points

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In addition to swiping cards, directly withdrawing cash abroad is also a common payment method. But if you are not careful, ATM withdrawal fees may quietly “eat up” your budget. This money-saving tip will teach you how to withdraw and exchange currency smartly.

Fee Structure of Overseas Cash Withdrawals

When you withdraw cash from an ATM overseas, the fees usually consist of two parts:

• Issuer Handling Fee: The fixed fee or proportional fee your bank charges for each overseas withdrawal.
• ATM Owner Bank Service Fee: Some local banks charge an additional service fee for foreign cards using their ATMs.

The combination of these two fees can make your withdrawal costs quite high. Therefore, it is best to consult your bank about the relevant charging standards before departure.

UnionPay Exchange Rate Advantages and Withdrawal Tips

For UnionPay card holders, withdrawing cash at ATMs that support the UnionPay network is a good choice. UnionPay’s biggest advantage is that it settles directly in RMB, avoiding the double conversion process like Visa or Mastercard, which first converts the local currency to USD and then to RMB, thereby reducing exchange rate losses.

Although in some currency pairs, other card organizations may have more advantageous exchange rates, UnionPay usually performs well in RMB-related transactions.

Withdrawal Little Tip: The exchange rate difference between different card organizations can reach 1-2%. This means that in a transaction equivalent to $1,000, you may pay an extra $10 to $20. It is recommended that you withdraw enough cash for several days at once to reduce per-transaction fees.

Exchange Timing and Location Selection

If you need to exchange cash before travel or after arrival, the choice of location and timing is crucial.

• Location Selection: Try to avoid exchanging currency at airport exchange points. Airport exchange rates are usually the least favorable. They take advantage of the convenience of the location to charge higher fees to travelers in urgent need of cash. In contrast, banks or professional exchange institutions in the city center can usually provide better exchange rates.
• Timing Selection: Foreign exchange market rates change in real time. Usually, exchange rates from Tuesday to Thursday are relatively stable. You should avoid exchanging on weekends or bank holidays, as the market is closed at this time, and exchange points may increase the spread to avoid risks. You can use some exchange rate reminder functions in mobile apps or websites to track exchange rate changes and seize the best exchange timing.

Tip 4: The Ultimate Money-Saving Tip of Stacking Discounts

If you have mastered the previous basic tips, now is the time to learn how to stack various discounts to maximize savings. This ultimate money-saving tip can make every overseas purchase worth the value.

Digging for Credit Card Overseas Cashback

Many banks launch high cashback activities for overseas spending, which is your first layer of savings. You can actively inquire and register for these activities. For example, some credit cards offer up to 3% cash back on international dining spending and do not charge foreign transaction fees.

Little Tip: Banks usually determine the cashback ratio based on the merchant’s category code (MCC). If the merchant code is incorrect, the cashback you receive may be lower than expected. Before applying for cashback activities, be sure to confirm whether your credit card waives foreign currency transaction fees, otherwise this fee may offset your cashback benefits.

Making Good Use of Exclusive Discounts on Payment Platforms

In addition to credit cards, the payment platforms you commonly use are also good helpers for saving money. For example, Alipay and WeChat Pay often cooperate with overseas merchants (such as large e-commerce platforms or offline duty-free shops) to launch exclusive coupons or better exchange rate activities. Before checkout, remember to open your payment App to see if there are red envelopes or discounts you can claim.

Making Good Use of Cashback Websites to Earn Extra Money

When shopping online overseas, you can get a second layer of discounts through cashback websites. Websites like Rakuten cooperate with thousands of retailers. Its operation mode is very simple:

1. Register as a member of the cashback website.
2. Jump to the e-commerce platform you want to shop through the website’s link.
3. After completing the purchase, a certain percentage of the spending amount will be returned to your account.
4. This cashback can be accumulated and withdrawn through PayPal or checks.

This simple step can allow you to earn an extra sum of cash in addition to merchant discounts.

Compare Prices Across Multiple Platforms Before Shopping

In the final step before placing an order, don’t forget to shop around. Especially during large promotional seasons like “Black Friday,” prices on different e-commerce platforms may vary greatly. You can use some browser plugins to automatically complete price comparisons.

Tools like Honey can automatically test available promo codes when you check out and help you find the lowest price. You can also add your favorite items to its “Droplist,” and once the item drops in price, it will notify you immediately, helping you seize the best purchase timing.

Tip 5: Embrace New Multi-Currency Accounts

If you frequently conduct cross-border transactions or need to manage multiple foreign currencies, the high fees and complicated processes of traditional banks may give you a headache. At this time, a new money-saving tip is to use multi-currency accounts.

What is a Multi-Currency Account

You can think of a multi-currency account as a “mini bank you carry with you.” It allows you to hold, exchange, and manage multiple foreign currencies in one account at the same time. Compared with traditional bank accounts, it provides significant advantages:

• Low Cost and High Efficiency: Such accounts usually have no monthly fees or minimum deposit requirements and provide exchange rates close to the market mid-rate, with lower transaction costs and faster transfer speeds.
• Easy Risk Management: You can exchange and hold foreign currencies in advance when the exchange rate is favorable, thereby locking in costs and effectively avoiding fluctuations in the foreign exchange market.
• Simple and Convenient Operation: The account opening process is completely online, without the need to go to a bank branch. You can easily manage all foreign currency assets on one platform, simplifying financial operations.

Introduction to Tools like Wise and Revolut

There are many excellent multi-currency account tools on the market, among which Wise and Revolut are two popular choices. They are both committed to providing more transparent and lower-cost services than traditional banks, but they have different focuses in functions.

• Wise: Known for its transparent fee structure and real “market mid-rate” exchange rate. It supports more currencies to hold and is very suitable for users who need frequent international transfers.
• Revolut: More like a full-featured digital banking app. In addition to multi-currency accounts, it also provides budgeting tools, virtual cards, and other banking services. However, you need to note that its free account charges additional fees for currency exchange on weekends or holidays.

Which one to choose depends on your specific needs. If you pursue ultimate low fees and transparency, Wise may be a better choice. If you want more diversified financial functions in one App, Revolut has more advantages.

Account Opening Process and Usage Scenarios

The process of opening such accounts is very simple, usually only a few steps:

1. Download the official App or visit the website.
2. Enter your mobile phone number and basic personal information (such as name, address, date of birth).
3. Complete identity verification as prompted, usually requiring uploading ID documents and a selfie.
4. After the account is approved, you can start using it.

The application scenarios of multi-currency accounts are very wide. Whether you need to pay overseas tuition, conduct international real estate investment as an individual, or need to receive payments from global clients as a freelancer, it can help you easily handle cross-border fund flows and make your financial management more efficient.

Now, you have mastered 5 core money-saving tips for overseas payments:

1. Use zero-fee credit cards
2. Insist on choosing local currency
3. Make good use of ATM withdrawals
4. Stack various discounts
5. Embrace multi-currency accounts

Please remember, there is no best payment method, only the combination that suits you best. According to your destination and spending habits, notify your bank in advance and flexibly use these methods to achieve maximum effect.

Master these tips to make every overseas purchase worth the value!

FAQ

If the merchant asks me which currency to pay in, how should I choose?

You should always choose to pay in the local currency. For example, if you are spending in Japan, choose Japanese Yen (JPY). This can help you avoid the DCC (Dynamic Currency Conversion) exchange rate trap and get a more cost-effective settlement price.

How do I know if my credit card has foreign transaction fees?

You can check your credit card statement and look for the “Foreign Transaction Fee” item. The most direct way is to contact your card issuer’s customer service or log in to its official website to view the card terms and fee descriptions.

When traveling abroad, should I exchange more cash or swipe more cards?

It is recommended that you use a combination. Carry a small amount of cash for small payments such as transportation and snacks. For large purchases, prioritize using zero-fee credit cards, which are both safe and can enjoy cashback discounts to maximize savings.

I only travel abroad occasionally, do I need to open a multi-currency account?

If you are only traveling short-term, a zero-fee credit card can basically meet your needs. If you have online overseas shopping, overseas payment collection, or frequent international transfer needs, then a multi-currency account will be a more money-saving and efficient choice.