There have been quite a few credit cards lately that are touting “no foreign transaction fees” – the up to 3% charge you usually get from your credit card for using your credit card overseas. Call me a cynic, but I’ve always questioned whether no foreign transaction fee cards were making their money back by perhaps giving you a worse exchange rate than foreign transaction fee cards and adding in some other hidden things. I finally decided to put it to the test and took my Delta Platinum American Express card with foreign transaction fees, my Chase Sapphire Preferred card with no transaction fees, and my debit card for ATM withdrawals to the test on a recent overseas trip.
I made charges in London and in Rome at several merchants and withdrew money to test what the actual rate charged was with and without the foreign transaction fee. I made sure to make these charges on the same day so that it wouldn’t skew the results. Here are my findings:
Surprising to the skeptic in me, there was no noticeable difference in the exchange rates between the foreign transaction card, the non-foreign transaction card, and the debit card.
Therefore the decision of what card to use then comes down to how much you’re willing to pay for the miles / points on a foreign transaction fee card. For me – the decision is easy as I live in a Delta hub city. I always use my American Express card even with the foreign transactions fees. However, I may look to change this strategy as I’ve finally proven to myself that there is no chicanery with no foreign transaction fee cards.