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Credit cards with a low (or no) foreign transaction fees are designed to help you save money, by offering you lower fees when you travel overseas or shop online with an international retailer.
Use this guide to compare credit cards that charge lower foreign currency conversion fees, including those which give you added rewards. We also explain how to minimise travel money expenses, so that you get the most from your money.
If you’re looking for 0% foreign fee cards, you may want to consider multicurrency wallets or prepaid cards instead.
A foreign transaction fee (often called an FX fee) is an added charge for using your credit card to buy something overseas while you travel, make a payment that’s processed by a foreign bank or make a purchase in a non-Singapore dollar (SGD) currency.
If a foreign bank is involved in the payment process, it’ll count as a foreign transaction. That’s why some purchases can be considered to be foreign transactions even if they are made from within Singapore. For example, an online purchase at an overseas store.
Typically foreign transaction fees are around 2.5%-3.5% of your overall payment. It gets charged by your credit card network (such as Visa or MasterCard) and by the credit card provider (DBS, UOB, HSBC, etc.).
A bunch of credit cards offer low foreign transaction fees, so what else should you compare when considering a credit card to use overseas?
When you make a purchase or transaction in a foreign currency using a Singapore credit card, the total amount needs to be converted into Singapore Dollars. The conversion process varies based on factors including the card provider and whether it’s an American Express, Mastercard or Visa product.
Currency conversion exchange rates are updated on a daily basis and apply even if you have a card that charges $0 foreign fees. Please note that most banks use an exchange rate that’s less competitive than the standard rate.
Say you were on a trip to New York and used your Singapore credit card to pay for a pair of shoes worth US$100. If the exchange rate between US dollars and Singapore dollars was US$0.75 per S$1, then this transaction would be converted to S$132.18. So, instead of your credit card statement showing a transaction of US$100, it would show one of S$132.18.
Depending on the card you’re using, you will receive the exchange rate set by Mastercard, Visa or American Express. The following diagram explains how Singapore credit cards convert currency with American Express, Mastercard, Visa or UnionPay:
Mastercard, Visa and American Express will convert the foreign currency amount to USD before converting it to S$ (unless your transaction is already in USD). Both of these conversions will transfer at the daily exchange rate.
For transactions made in any other foreign currencies, UnionPay will convert the currency to USD before it is converted to S$. As a result, if the Singapore Dollar is not favourable against the United States Dollar, using a UnionPay credit card for any of the listed currencies could be the most cost-effective option.
Mastercard and Visa both have their own currency conversion calculators, but you can also compare exchange rates from popular transfer providers on Finder.
When you shop overseas with a Singapore-issued card, you may be asked if you’d like to spend in the local currency or Singapore dollars. This refers to Dynamic Currency Conversion (DCC) and opting to pay with Singapore dollars will subject your purchase to extremely poor exchange rates from the DCC and additional bank charge from your credit charge issuer. If you’re spending with a card with 0% on foreign transaction fees, you should always opt to pay in the local currency rather than in Singapore dollars.
To give you an idea of the potential savings a credit card with foreign transaction admin fees waiver, let’s say you spend $5,000 while you’re travelling overseas. If you had a card that charged a 1% admin fee and 2% for other foreign transaction fees, you’d have to pay around $150 more for your spending. A card with no foreign transaction admin fees would only require you to pay around $100 extra on your expenditure. As well as saving you money on your spending, this would also cut down on interest charges and could help you pay off your balance faster.
Unfortunately, you can’t avoid foreign transaction fees. However, here are some tips to keep in mind when comparing credit cards:
That’s up to you to decide. It’s important to consider all your travel money options and it can be useful to have several ways to access money when you’re overseas. As well as a credit card, you may want to consider some of these other travel money products:
If you’re a frequent traveller or regularly shop online with international retailers, a credit card that has reduced foreign transaction fees could help you keep your costs to a minimum. Just remember to compare a range of options and look at the other features available so that you can find a credit card that suits your needs. If you’re ready for a credit card that benefits you overseas, start comparing your options here.
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