A Step Beyond Foreign Transaction Fees: Bank Exchange Rates Affect How Much You Pay Abroad

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The other day, when I wrote about my experience booking a hotel room in Martinique, I pulled up the Mercez app to see what exchange rate I’d get on $1,118 Euros with the Citi Prestige card.

Lots of cards advertise “no foreign transaction fees” which means they don’t add extra fees to the amount they convert.

Mercez tells you the real rate for each of your cards

Mercez tells you the real rate for each of your cards

But what’s interesting is not all banks convert cash at the same rate.

The amounts can add up, especially if you spend a lot (or live) abroad.

Rates according to Mercez

For simplicity, let’s look at the exchange rate of 1000 Euros into dollars.

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1000 Euros = ~$1,088 dollars

According to Google, you’d spent ~$1,088 if you on a purchase of 1000 Euros.

A 3% foreign transaction fee (FTF) on that amount is an extra ~$33, so it’s easy to see why people want to avoid paying them.

Even if there are no FTFs, the bank that issues your card won’t necessarily give you the going exchange rate.

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AMEX, Chase, Citi, and Discover all convert the same amount differently

Mercez is a slim iPhone app that lets you plug in your cards, and tells you the final cost in USD of various foreign currencies.

Because I’m heading to Europe soon, and paying for a hotel room in Martinique (it’s on the Euro because it’s a French island), I wanted to see which could would give me the best rate.

I plugged in:

All of the cards have different bank exchange rates. 

The best exchange rate comes from Citi Prestige, which is lucky because I’ll save money and get the 4th night free in Martinique.

The runner-up was Discover it, which met the current exchange rate almost to the cent.

Update 12/13/15: I confirmed via Twitter with Mercez this issue has been resolved. I still recommend checking Mercez for large purchases abroad, or if you plan on staying overseas long-term.

But surprisingly, the Chase Sapphire Preferred actually had the worst bank exchange rate – a full $41 more than Citi Prestige.

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Mercez includes FTF fees in its calculations. You can see the difference between the AMEX Hilton and AMEX Platinum is ~3%

That’s because each card handles the exchange based on different issuers.

For example, the Chase Sapphire Preferred transfers are processed by Visa, Citi Prestige is processed by MasterCard, while Discover and AMEX handle the exchange for their own cards.

Even still, using a credit card for foreign purchases is still better than exchanging cash.

In this case, you’d spend a full $140 more than the best credit card exchange rate (Citi Prestige) if you had to exchange your US dollars into Euros.

Bottom line

While I like the idea of “no foreign transaction fees,” that’s only the beginning. Each bank has its own exchange rate. And who processes the transaction also influences the final amount you’ll pay (Visa, MasterCard, AMEX, or Discover).

The Mercez app for iOS is all of ~9MB, so it hardly takes up any space on your phone. It supports nearly every card you can think of, and tells you this information for whatever amount you want to spend.

It’s worth a download if you spend a lot overseas, or if you plan an extended trip. Lots of transactions can really add up over time.

Anyway, thought this would be interesting to share. For real road warriors, I’d call this app a must-have.

Of course, it doesn’t take into account bonus points on certain categories. So even if you want a certain type of points, you still might be curious about how the bank exchange rate compares overall.

Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

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About Harlan

Just a dude living in Dallas.

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Comments

    • Yes, I noticed that too. I’m going to reach out for an answer about that. Thank you for mentioning because it’s important!

      Will update when I find out anything.

      And thank you for reading and commenting!

  1. Harlan,

    I liked your article. I think it really does vary day by day though. When I checked the Chase Sapphire rate was worse that my other two no foreign transaction fee cards, but two days later it was tied with the best one. Maybe not worthwhile checking for everyday type purchases, but if I was making a big purchase in foreign currency, I might check.

    • Thank you, Kim!

      Mercez just found a solution to the issue I mentioned, so this post needs an update already.

      I agree, the app is useful for big purchases – or if you plan on spending a lot of time abroad.

      Thank you for commenting!

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