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Lots of cards advertise “no foreign transaction fees” which means they don’t add extra fees to the amount they convert.
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.
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.
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:
- AMEX EveryDay Preferred (which includes the card’s ~3% FTF)
- Chase Sapphire Preferred
- Citi Prestige
- Discover it
All of the cards have different bank exchange rates.
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.
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.
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.* If you liked this post, consider signing up to receive free blog posts in an RSS reader and you’ll never miss an update! And thanks for using my links to apply for new card offers!
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. The opinions of the commenters are not necessarily the opinions of this site.
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