I'm sure many of you are traveling to Europe from Korea for the summer vacation. When traveling abroad, credit cards are the most reliable payment method, and among credit cards, the Choose a card with no foreign transaction fees (forex fees)shouldn't need to be emphasized any further.
Shortcuts: U.S. cards that work in Korea and don't have foreign transaction fees
Still, we know you have questions.
- If there are no foreign transaction fees, where do banks make their money? Are they just playing with the exchange rate by saying they don't charge fees?
- Do all card companies offer the same exchange rate? Is there a card with a more favorable rate?
And so on.
I've always believed that it's "better than currency exchange or remittance exchange rates" based on general knowledge, but this time I realized that I should dig a little deeper and study it. So to experiment with the modalities Experimenting with five cards to pay the same amount at Le Petit France, a fancy coffee shop in Paris, France.I did.
but not fast enough.
I'm sitting in the corner of my house, pulling out five cards from different issuers, different networks. German Amazon SiteI bought a 5 euro gift certificate from a store on July 18 at one o'clock in the morning. There is a 2-3 minute time difference in the purchase due to the repetition of the process of entering the card number and pressing order, but I would say it is a negligible deviation. It is a precise experiment. ;;
The five cards below are the ones we used for this experiment. In alphabetical order
- Amex Platinum - Amex
- Barclays Arrival - Master
- Chase Hyatt - Visa
- Chase Sapphire Preferred - Mastercard version (currently Visa only)
- Citi Hilton Reserve - Visa
As you can see, Includes all major credit card companies for mileage earning, with an even mix of Amex, Mastercard, and VisaI did. For Chase, I threw in Sapphire Preferred and Hyatt to see if there was a difference between Visa and Master.
The results are as follows
1. Amex Platinum: $6.59
2. Barclay - Arrival (Master): $6.56
3. Chase Hyatt (Visa): $6.56 ($6.59 for temporary)
4. Chase Sapphire Preferred (Master): $6.56
5. Citi Hilton Reserve (Visa): $6.56 ($6.59 for temporary)
Only the Amex was slightly higher at $6.59, while the other cards all had the same result at $6.56. You shouldn't jump to the conclusion that "Ugh... Amex... I shouldn't use it." There are some more important conclusions to draw, which I'll detail below.
1. credit card company messing with the exchange rate? No such thing, the exchange rate is good.
The most important conclusion is that credit card companies don't play around with exchange rates. Oanda.comis a website that references exchange rates for reimbursement by governments and businesses. Looking at the historical exchange rate on this site, on July 18, the interback rate used for interbank transactions is $1.3137 for 1 euro. That's $6.5685 for 5 euros, right? If you look at the exchange rate on July 19, the day of the actual post, it's $1.3103 for 1 euro and $6.5515 for 5 euros, right? That's a difference of 1 cent.
2. the exchange rate seems to be more about the card network (master, visa) than the card issuer.
The second conclusion is that the exchange rate is determined by the card network, not the credit card company. I came across a link on Flyertalk that said VISA, Mastercard, and Visa all list the exchange rate on their respective sites, and each issuer will honor that rate if they don't charge a separate forex fee.
Shortcuts: Visa Card Company Exchange Rate Bulletin
Shortcuts: MasterCard Company Exchange Rate Bulletin
3. Depending on the card network, the exchange rate effective date may vary.
So why would Amex apply a different amount than Visa Mastercard, you might be wondering. The clue to the answer came from the good folks at flyertalk. According to a post on Flyertalk Visa uses the exchange rate in effect on the processing date, while Amex uses the exchange rate the day before the processing date, so there's bound to be a difference. In my experiment, Amex was more unfavorable, but I'm sure it could be more favorable depending on how the exchange rate fluctuates.
4. the exchange rate may change as you move from temporary authorization to final posting.
One thing that was interesting in this experiment was that there were some cards that changed the rate as we went from temporary authorization to final posting, Chase Hyatt and Citi Hilton Reserve, both of which are Visa cards. I didn't capture the Hyatt, but if you look at the Hilton Reserve below, it's $6.59 at temporary authorization, and then it went down to $6.56 as we went from temporary authorization to posted charge as you can see in the screen above. I think it's probably because the processing date has changed and the new exchange rate for Visa cards has been applied, but I don't know the exact reason for 100%. If anyone knows, I would appreciate it if you could let me know.
This turned out to be a longer post than I thought.
Enter a 3-line summary.
1. When traveling abroad, using a credit card is the best option for safety and convenience.
2. If your card doesn't have foreign transaction fees, the credit card company doesn't play around with the exchange rate.
3. which network (Visa, Mastercard, Amex) is authorized is more important than the card issuer.
I'll make sure my next experiment is in a proper Parisian café 🙂 .
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39 Comments. Leave new
That's an interesting experiment, Mamo, and I'm sure you bought a 25 euro gift certificate that can be used in the US, right? I'll keep your results in mind.
Huh? Was there something else available for the US? I didn't know. I'll just have to ship it to the US, lol.
That's what they say about a dog's horn, lol.
Thank you for the nice experiment. I will refer to it when I visit Korea in September ^^.
Yep. I think the same thing will happen in Korea.
I also thought, "Mamo has a lot of miles and went to Paris at the end of this week..." while reading, but Paris is in the dog's horn... hehehe.
I haven't used the card abroad yet, but I think it will help me a lot when I visit Korea or travel abroad in the future.^^)
We applaud your willingness to experiment... Tsk tsk
I think the best thing I ever did with Milemoa!!! was to create a card with no foreign fees.
I go to Canada two or three times a month, and I always exchange 1:1 at a local gas station.
The Canadian dollar is a bit cheaper these days! It's a waste to exchange 1:1 every time I go.
I'm not sure if I'll ever be able to get my hands on a Chase Hyatt card... and the annual fee, and the murderous Tex in Vancouver.
I feel like it's getting a little cheaper.
Thank you so much Milemoa, I really appreciate it ^^.
Mamo, that's an interesting experiment you did.
Thank you for confirming what we've all been saying all along, "It will happen.
Interesting experiment, but at least I know that credit cards don't play around with exchange rates. Thanks.
The value of the date element that each network sends is what banks recognize as the amount of the payment. So whether you use your Chase Sapphire Visa in Canada or Somalia (Somalia is not accepted), the issuing bank knows how much you spent abroad in each country, but they don't use that amount. The network already applies the exchange rate and sends it to the bank, so it's easier to just take the information and use it than to track the exchange rate.
Anyway, you're awesome, Milo.
so that it's really our hooray for wear and tear.
You seem to be doing a good job...
Hooray for real wear and tear, with such an awesome captain at the helm.
It's fast as shit...but...
I was wondering when you'd been to Paris.
Thank you for the experiment for the Magicians.
Sounds like you're getting ready for a quick trip somehow 🙂 Thanks for the precise experiment!
You're amazing, Milemoa! I love your experimental spirit and your witty lines! I'm falling asleep at the "horns" part!
I was most curious about the exchange rate when using the card abroad, and you explained it in detail.
Thank you. ^^^^ ^^.
Mamo~ I'll post a proper experiment I did this December in Dogpile Parley.
The cards that don't have foreign spending fees are currently Sapphire, Amex Flat, and something else I can't think of~ Thanks.
Thank you.
The main point of this article is the
Fast as hell~:)
You're scratching the right itch... lol.
I thought it was weird that the last one I used in Europe had a difference in the amount between PENDING and POSTING, but I guess that happens!
I think visa or mastercard prefixes the pending at the previous day's rate like amex does. Amex uses the previous day's exchange rate until the end, and Visa or Master uses the updated day's exchange rate upon final approval. I think the amount that was pending on Visa or Master and the amount that was finally processed on Amex are the same because they are the same day's exchange rate.
I was wondering the same thing, so thanks for clearing that up.
I'm curious to know what happens to the base rate from one day to the next.
I thought for a moment.
I wonder if I can meet Mamo if I follow her quickly now. I wonder what happened to Mamo, who rarely reveals her activities, to make her change her mind and come out like this.
And off we went.
Flying horns......
I think your experimental spirit will attract more followers.
Good job and thank you.
I've asked this before as a question on the message boards.
I see you're an experimentalist, Mamo.
Thank you.
I'm not fast enough... lol
What a twist on the experiment, flies are bullshit lol I like it.
I did the same experiment in Korea a few years ago.
The results were different then.
I scratched the same amount at the same place on the same day with Citi, Kookmin, Shinhan (Elgie at the time), and BCC(?) cards,
The results were different for each card company, some with FOREX and some without.
(I think the FOREX attachment had a higher rate, but I don't remember...)
So, my conclusion was, just use whatever you feel like... lol.
Anyway, thanks for the experimental data!
I see, I'm not sure about the Korean card because it's so complicated ;);
After all, the twist is what makes it interesting ^^ Thank you for experimenting with it yourself.
Thanks for the fun experiment~!
Now that I've been in the U.S. for a year, I'm thinking of trying my hand at making cards, but I'm not sure how well it will go.
Thanks for the great information. I hear about the "fast dog" and think it would be interesting to read your travelogue.
It's a great experiment...you're welcome!
When you say temporary, that's because it's being applied at the exchange rate that was in effect when it was approved electronically, and the difference in the actual amount charged is probably due to the fact that the date the invoice was received was incorrect and it was calculated at the exchange rate on the day the invoice was received.
Yes. That's my understanding as well.
Hmm I'm not sure if anything has changed recently, but the Euro - Usd exchange rate was 9/13 9/14 1.196 1.94. For Amex it was posted on 9/14 and when I calculated it, it was 1.998. This isn't the first time this has happened. Hmmm. I've been experiencing it a few times.
Can you elaborate on that?
I apologize. I'm writing this from my cell phone in another country, and for some reason I kept getting errors, so I couldn't write it well enough and rushed it up. I checked again, and as you said, it's because the exchange rate is applied the day before processing. The last time I checked the live exchange rate, it was changing quickly in favor of euros, so I hurriedly paid with AMEX, but the price came out much worse than expected because the exchange rate was applied before it changed.
I think this is still valid information, especially if you use good judgment about exactly when and which exchange rate applies. We apologize for any misunderstanding/confusion.
One thing to add.
I live in Europe for the time being and am very sensitive to the EURO-USD. The misunderstanding/problem I had with the above is that the exchange rates used by credit card companies are all different and sometimes quite significantly different.
For example, I use an app called XE currency and I check the real-time exchange rate fluctuations when I make a payment, and sometimes this exchange rate and Amex or Visa/Master show quite different trends. For example, on 9/14, I suddenly see the euro drop below 1.19 against the USD quite significantly. Oh I'm making a pretty big payment, so I'm going to charge it to my US card, and when I do that, the Amex is charging at a much higher rate (1.1998) before the drop... Okay, on 9/15 it's still pretty low at that level, so I'm going to charge it to visa this time, and the visa network is at 1.198 on 9/15, while the Amex is at 1.198. https://www.oanda.com/currency/converter/ In 1.189.
The lesson here is that it's easy to lose money by reacting to the moment-to-moment fluctuations in exchange rates, and it's often wiser to play the overall trend in exchange rates.
Yes. I think even if you use the same rate, there might be a subtle difference because it is applied at different times. Last year, I read in FT that Mastercard is gaining ground. Why don't you give Master a try?
Thanks for the nice experiment!!! You traveled to Germany (online) for the experiment!!! Isn't that cool lol
This eliminated any worries I had that something was going to cause the kids to roll their eyes backwards!
This is a very old post, but thanks for commenting. 🙂 🙂 .
This is an old post, but I'm commenting to share because I've experienced it myself.
We're seeing the yen spike in a single day, and it happened on Monday over the weekend.
I used my Amex card to pay for shopping, food, and more on a weekend trip to Japan.
After scratching, I always check the app to see how much I've scratched, and I got paid at the same exchange rate over the weekend, and I got paid at the exchange rate right before it spiked, so I actually saved quite a bit of money.
Of course, if I'd cashed it all in beforehand, that would be one thing, but I don't do a lot of exchanging when I'm thinking about using the card, so I've found Amex's exchange rate to be useful.
Glad to hear the exchange rate worked out in your favor. Thanks for sharing your story.