3 Things You Need To Know When Using Credit Cards To Pay In Foreign Currencies

This article was originally on GET.com at: 3 Things You Need To Know When Using Credit Cards To Pay In Foreign Currencies

Did you know that card transactions processed overseas in Singapore Dollars are subjected to a seemingly phantom fee called 'international processing fee'? While credit cards can help us save money, it is important that you know what you are paying for, especially when things get a little more complicated because foreign currencies are involved.

Depending on the credit card you are using, the total foreign transaction fee that you have to pay can vary. Below, we at GET.com highlight the top three things you ought to know when using your credit cards to pay in foreign currencies.

3 Things You Need To Know When Using Credit Cards To Pay In Foreign Currencies

1. The Various Charges And Fees

Credit cards afford us unparalleled convenience as well as credit card rewards when we use them to pay for purchases, but note that besides the foreign exchange rate, other fees and charges such as the currency conversion fees set by payment networks like MasterCard/Visa/American Express and banks' administrative fees apply as well. And this is the reason why the amount reflected in our credit card statement tends to be higher than we'd imagined.

Unlike the majority of travel-oriented credit cards in the United States that pride themselves on having "no foreign transaction fees", the travel credit cards in Singapore unfortunately do not come with this perk. Also, bear in mind that foreign exchange rates as well as the banks' administrative fees can vary as these are set by the banks.

If you travel a lot or if you shop in foreign currencies regularly, then perhaps you'd want to consider the CIMB credit cards shown below. The bank waives the 1.4% administrative fee that it charges by giving it back to you in the form of a cash rebate in the following statement month.

2. There Could Be Multiple Currency Conversions Going On

Generally, if your transaction is in U.S. Dollars, that amount will be converted into Singapore Dollars using the prevailing exchange rate. Should the transaction be in a foreign currency other than U.S. Dollars, say Japanese Yen, the transaction amount will first be converted into U.S. Dollars and then, converted one more time into Singapore Dollars.

Double currency conversions like that simply translate into higher costs, especially when coupled with the bank's administrative fees and currency conversion fees that MasterCard/Visa/American Express and other payment networks charge when one is making large purchases in foreign currencies.

3. The Right Cards Will Help You Earn Rewards And Miles

I don't know about you but no matter whether I'm spending locally or overseas, I make it a point to try my best to maximise my rewards as much as I humanly can. To do that, you must first pick the right travel credit card for yourself.

Some cards give you the most miles per $1 of overseas spend while others give you the most miles per $1 spent in Singapore.

What do you think? Share your comments with us below!

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