Downunda

Dear Brain,

Here’s our dilemma: We have moved overseas and have been using our Canadian credit cards in our new country. We believe we are not being charged any extra fees for the use of this card, other than the difference in exchange rates. First of all, does this sound right to you? We have called the credit card company about this and remember that being their claim.
 
Anyway, we are wondering if it’s better to continue using this card or to get one from this country, which usually seems to include a $50-$100 annual fee.
 
Also, any recommendations for a good Aussie credit card?
 
Cheers,
T&J

Dear T&J,

Typically credit card issuers will asses a foreign exchange conversion on your purchases. This can be as much as 5% of the purchase.

From a Cardholder Agreement:

Foreign Currency Transactions: If you use the Account to make Purchases or obtain Cash Advances in U.S. Dollars, Euros, Great British Pounds, Australian Dollars, or Mexican Pesos, the foreign currency will be converted directly to Canadian Dollars before it is recorded in the Account. If you use the Account to make Purchases or obtain Cash Advances in any other foreign currency, the currency will be first converted to U.S. Dollars and then to Canadian Dollars before it is recorded in the Account. Credits to the Account involving a foreign currency will also be converted directly to Canadian Dollars, or first to U.S. Dollars and then to Canadian Dollars, depending on the foreign currency involved as set out above.

For debit Transactions, currency will be converted by applying a rate established by VISA plus a fixed percentage as shown in the Disclosure Statement. For credit Transactions, currency will be converted by applying a rate established by VISA minus a fixed percentage as shown in the Disclosure Statement. As a result, for credit Transactions made in respect of prior, related debit Transactions, the Canadian Dollar amount credited to the Account will in most cases be less than the Canadian Dollar amount that was originally debited to the Account. The rate that is used will be the rate on the date that a Transaction is recorded in the Account and may be different from the rate in effect on the date of the Transaction. 

If that wasn’t confusing enough, we now have to reference the Disclosure Statement:

Foreign Currency Transactions: When we process a foreign currency transaction (both a charge and a credit), we convert your charges at the rate of 2.5% calculated as described in the Cardholder Agreement under “Foreign Currency Transactions”.

In this case it looks like issuer asses a 2.5% premium for foreign currency transactions. You will have to check your Cardholder Agreement and Disclosure Statement to understand the specifics of your card.

At this rate, if you plan on making over $2,000 worth of purchases it makes sense to pay the $50 annual fee for a local card.

Regarding a good card in OZ… here is a link to 3 cards with no Annual Fees http://www.creditcardoffers.com.au/no-annual-fee.html

G’day mates!

-cb

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One response to “Downunda

  1. by the way, we went to the bank today and got a credit card that you recommended. thanks for the good advice!

    -T&J

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