What is it?
A currency exchange fee, also called a “currency conversion fee,” “foreign currency conversion fee” or “foreign currency exchange fee,” is a fee you’ll be charged when by a bank or foreign store when you convert dollars into foreign currencies. For example, when you use your U.S. credit card in Mexico, you will probably have to pay a currency exchange fee for the transaction, unless you have a credit card that doesn’t charge a foreign transaction fee. Another example is that when you send remittances internationally, sometimes the bank will charge an exchange rate fee.
How does it work?
When you use your U.S. credit card to make a purchase in Mexico in pesos, the amount must be converted to dollars for your U.S. bank to process it.
How much does it cost?
A typical credit card currency exchange fee is 1% of your purchase price.
How to avoid it?
- Use credit cards that waive currency exchange fees:
- Some examples are: Bank of America Travel Rewards Card, Capital One Quicksilver Card, and Delta SkyMiles Gold American Express Card.
- Ask your bank if it has a foreign partner.
- When using U.S. debit card at your bank’s international partner’s ATMs, your bank generally waive or lower the cross-bank transaction fee and currency exchange fee.
- Send international remittances to your foreign bank account before travelling
- If you send money to your foreign bank before travelling, you don’t need to worry about currency exchange fee. Here are a few websites that you can use to send money internationally: Remitly, WorldRemit, Western Union, TransferWise, Bridge21.
