I’m scanning my RSS feeds as I usually do, when I come across an MSNBC article, “Travel Abroad for Less: Cut your expenses by keeping an eye on the cost of money.” I’ve seen enough of this type of article to have a pretty good idea about what it’s going to say, but since I’m always looking for some interesting tidbit to post, I can’t resist the urge to click. The article starts me off with the usual fluff:

You’ve got your passport and your walking shoes. You’ve spent months assembling an itinerary and brushing up on your Renaissance art. You can almost feel yourself drooling while imagining that first taste of real Italian gelato while strolling through cobblestone streets.

Alright, I’m really feeling that urge to go to Italy now — I can almost taste it. Please do tell how I’m going to save thousands on that gelato! The answer? Find a credit card that won’t charge you a foreign transaction fee on international purchases:

The survey found that both Visa and Mastercard (NYSE: MA) create profits by charging 1% processing fees for purchases you make in foreign currency, and card-issuing banks tack on an additional fee. Many cards, including those issued by Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), US Bancorp (NYSE: USB), and GE Money (NYSE: GE), charge as much as 3% on what you buy abroad. On the other hand, at least one card issuer not only doesn’t charge its own fee but also reimburses you for the Visa/Mastercard fee. (You can sneak a free peek at that bank issuer with a free Green Light trial.) [See for yourself...]

What?! I do a double take. There’s a credit card issuer out there who won’t charge me a fee, but I need to sign up for a “free trial” of Green Light to learn who it is? Now I already know there’s a credit card that reimburses fees charged by Visa and MasterCard, but I was surprised that I needed a free trial for them to tell me. (If you don’t know what the credit card is, read on, I’ll tell you — for free!) For starters, I’m reading MSNBC, so I figure the news will come with no strings attached. To MSNBC’s “credit,” this is really a “Motley Fool” article which MSNBC is reprinting, and I’m only writing about it to offer a segue into naming the mysterious card that will likely be revealed when you sign up for the free trial of Green Light: Capital One.

I’ve seen several posts from readers questioning whether Capital One has changed their policy on reimbursing card holders’ foreign transaction fees that Visa and MasterCard charge. The answer, I think, is no. Capital One still does not pass along the fee. After grilling card service representatives and scouring my credit card’s fine print and terms of service, all indications are that Capital One has not changed their policy. I’ve also manually calculated fees on foreign purchases made with my Capital One credit card and do not see any evidence of a 1% fee being assessed. Of course I don’t work for Capital One and can’t speak officially for the company. And since other readers are apparently getting mixed signals when communicating with Capital One, this might be worth keeping an eye on.

Furthermore the Washington Business Journal recently reported (for free, believe it or not) that Capital One is slashing 280 jobs and restructuring their credit card unit:

“This decision is about creating efficiencies and enabling innovation so that we can continue to compete effectively in a mature card environment,” Rakes said. [Read more...]

Changes are definitely afoot at Capital One, and I get a little queasy when businesses start talking about “creating efficiencies.” I suppose we’ll find out eventually whether, in addition to firing 280 people, these efficiencies include increasing card holder fees.

Finally, I didn’t sign up for a free trial of Green Light. I’m only assuming that the card issuer is Capital One because there is only one credit card I’m aware of who doesn’t charge foreign transaction fees. If I’m wrong, please be the one to let me know!

A couple month ago, we wrote about the dangers of using debit cards to make purchases at gas stations. Unfortunately it turns out that many of those same dangers apply when using debit cards for car rentals as well. Not only that, additional risks apply. Since people are increasingly using debit cards to make purchases and since many car rental companies will accept payment in the form of a debit card, the risks are worth being aware of.

The problem for consumers arises when the car rental company puts what is usually called an “authorization hold” on the debit card during the time of the car rental. This amount varies depending on the rental company and type of car, but is usually between $200 and $400. Although the money is usually refunded to the account (unless the car is damaged or unreturned), on a debit card this refund may not occur as quickly as expected. It can take some banks weeks to release funds back to your debit card account.

Credit cards have built in measures to protect consumers from this problem by allowing merchants to apply a “hold” on the funds without actually passing the transaction. This allows car rental companies to verify that you have funds available without actually charging you to prove it. With a debit card this is not the case.

The second issue to be aware of is the “daily spending limit” on the debit card being used. Between the “authorization hold” and the actual cost of the rental can be easy to rack up over $1000 in expenses. If the amount of the car rental exceeds the debit card spending limit set by the bank issuing, using a debit card would not be possible.

At the end of the day, if you must use a debit card to make a car rental be sure that you have more than enough money in your account to do so, and that you will not be requiring the “authorization hold” to be returned to you for a couple weeks.

These days you can get insurance for just about anything, but in the travel industry, you can find insurance options for just about every aspect of travel you can think of:  trip cancellation, theft, baggage loss and even physical injury.  Additionally, the number of places you can buy travel insurance from is equally vast.  On the free side, many platinum credit cards come with basic travel related features.  But after that, the price for travel insurance can increase drastically, and it seems everyone is looking for a cut of the action.  Most car rental places will play coy about the free car rental insurance that comes standard with many credit cards as they try to pitch their own insurance options. Booking services will often offer cancellation protection for a fee, and travel agents can give you a whole host of insurance options when shopping for that perfect getaway.
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The San Francisco Chronicle writes an interesting story about a Copa Airlines customer who was double charged for using a different credit card at the checkout counter than the credit card used at the time of purchase. The customer was charged an extra $507.

This issue was eventually resolved in favor of the customer, but only after the Chronicle wrote an article and mediated the dispute. Apparently Copa’s rules state that a customer MUST produce the same credit card at the ticket counter that they used to purchase the ticket. This puts the customer is sticky situations if their credit card is lost, stolen, replaced or just not with the customer at the airport. It’s definitely worth checking out an airlines policy when purchasing tickets online.

Read the full article…

Today, I was horrified to hear a story from an infrequent international traveler about how easy it was to get cash from ATM machines in Canada with her credit card. What!? Credit card did you say? Yes, she was acting on advice from a friend that credit cards were a great way to spend money internationally while traveling. Very true, very true. But using your credit card to make purchases internationally and using your credit card at an ATM internationally are two entirely different matters.

While using the right credit card internationally can deliver extremely low conversion fees, using that same credit card at an ATM can be costly. Just as in the States, using credit cards at an ATM racks up cash advance fees, which are usually 3% of the amount being withdrawn. Some credit card issuers such as Chase and Bank of America will also add another 3% for the currency conversion. This adds a hefty fee to the final bill. On the other hand, using a debit card to withdraw cash at an international ATM can be a great way to avoid foreign transaction fees.

In emergency situations, a credit card can be used at an ATM — I’ve been there. But for everyday situations, find a good debit card and use that instead. In this case my poor friend will be paying 6% in fees or nearly 1 USD for 1 CAD on her purchases when the bill comes in, but is all the wiser nonetheless.

Using international ATMs to get foreign currency while traveling can save money when compared to buying currency at exchange rate booths. Although fee structures vary from debit card to debit card (see our chart of foreign transaction fees charged by debit card banks), the savings achieved when using a debit card to get foreign currency can be significant. Withdrawals are usually only 1-3% higher than the wholesale conversion fee. However, despite the advantages, you need to be prepared for special circumstances that can arise when using an international ATM. Below are a few tips to get you squared away.
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