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Foreign Currency Transactions: What Are the Fees and Which Are the Best Credit Cards to Use?

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We can all agree that we love travelling. But while the joy of anticipating a trip is immense, the struggle to try and get the best exchange rate for your foreign currency is quite annoying. Getting the best exchange rate is like timing the stock market – it’s impossible to do so!

How many times have you changed money at Raffles Arcade (thinking you’re getting a great deal), only to see the Singapore dollar get stronger in the days that followed?

Some of us have completely given up, and simply consent to getting ripped off by changing money at the airport.

So what should you do? Do you use your credit card for as many foreign currency transactions as possible?

Using your credit card overseas has these benefits:

  • Every time you make a transaction, it will use the most recent exchange rate for the conversion. This may possibly be better than what you changed in cash.
  • Carrying a few credit cards helps you settle most of your transactions. Use cash for places that don’t accept a card. You won’t get into a situation where you need to make overseas cash withdrawals.
  • Your transactions are better protected when you use your credit card.
  • You have a record of every expense incurred on your trip.
  • You are less likely to end up with too much excess foreign currency at the end of your trip.
  • Cashback, rewards, and miles from your credit card often still apply to your overseas transactions. In fact, some credit cards offer the highest rewards for foreign currency transactions.

This convenience comes at a price, though.

Most credit cards issued by any leading bank in Singapore can be used internationally and will be charged a small fee for certain transactions.

Here are the foreign currency transaction charges that you are paying for each time you use your Singapore credit card overseas:

  • Card association fee: This is a fee charged by your card association such as Visa, Mastercard, or American Express. It is charged in the form of a percentage of the transacted amount.
  • Bank administrative fee: This is a fee charged by your bank in addition to the fee charged by your card association. This is also a percentage of the transacted amount.
  • Dynamic Currency Conversion or DCC fee: This is a service that converts a foreign currency charge to Singapore dollars at the point of sale, allowing you to choose to pay in Singapore dollars rather than wait for your bank’s conversion. This service is offered by many merchants, online and offline. If the DCC service has been used, there are DCC fees that are applicable for the instant conversion, as well as card association fees from Visa, Mastercard, UnionPay, AMEX, or any other card association.

Must read: Don’t Pay in Singapore Dollars When Shopping Overseas

An additional point you need to know: Any charge made in a foreign currency other than USD will first be converted to USD according to the forex rate determined by your card association, and then into SGD. If you want to directly convert a foreign currency to SGD, that is when DCC will be used, if the option is available.

Here’s a look at foreign currency transaction fees charged by popular banks and card associations.

Bank Card association fee Bank admin fee DCC fee
Visa and Mastercard AMEX UnionPay
American Express

Bank of China 1% 0.6% 2% (Visa and Mastercard)

2.4% (UnionPay)

Rates effective as  of 1 December 2018

CIMB 1% 0% – 2% 1%
Citi 1% 1.5% 2% (Visa and Mastercard)

1.8% (AMEX)

DBS/POSB 1% 1% 1.8% (Visa and Mastercard)

2% (AMEX)

HSBC 1% 1.8% 1%
OCBC 1% 1.8% 1%
Standard Chartered 1% 2.5% 1%
UOB 1%


1.8% (Visa and Mastercard)

2.25% (UOB PRVI Miles World Mastercard and UOB PRVI Miles Visa Card)

2% (AMEX)

Source: T&Cs of respective banks. October 2018

From the table above, it’s clear that the best cards for foreign currency transactions are cards from CIMB and American Express.

To illustrate this, imagine that you bought a pair of shoes in Hong Kong that cost HK$1,000. You took our advice and chose NOT to pay in Singapore dollars (i.e. don’t use the DCC service). Let’s assume that the pair of shoes converts to S$200. Here’s how the final amount on your credit card account would look like:

Bank/Credit Card Total shoe purchase of S$200 + fees
CIMB Visa Signature Card or CIMB Platinum Mastercard S$202.00
BOC Family Card / BOC Elite Miles World Mastercard S$206.00
AMEX KrisFlyer Ascend Card S$205.00
HSBC Visa Infinite Card S$205.60
OCBC Titanium Rewards Mastercard S$205.60
Citi PremierMiles Visa Card S$206
DBS Altitude Visa Signature Card S$206.00
UOB PRVI Miles World Mastercard S$206.50
Standard Chartered Spree Visa Platinum Card S$207.00

Does this mean we should all get a CIMB Visa Signature Card or a CIMB Platinum Mastercard?

Well, it depends.

You have to consider what you will be making overseas purchases for, and whether you would be getting additional rewards, cashback, miles, or discounts on those purchases.

Some cards will give you accelerated points for shopping or travel bookings, or cashback on your dining expenses, etc. Cards like the BOC Elite Miles World Mastercard let you earn 5 miles/dollar during a promotional period. Occasionally, you may also want to use a particular card to meet minimum spends, and the additional fees may not be all that important.

Now that you know exactly what you’re paying each time you use your credit card overseas, you’re in a better position to decide how much cash you need and to make a conscious effort to try to reduce your credit card fees or maximise your rewards.

Geared up for your trip? Together with the knowledge on foreign currency transactions packed along with your bags, here’s a little something extra:

  • 10 Mistakes That Can Ruin Your Vacation and How to Avoid Them

The post [Infographic] 6 Things to Learn About Money from Warren Buffett appeared first on algo investing.

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