Credit Card Tips for International Travel

We are entering the peak of the travel season. Americans making international trips know that the dollar has dropped in value, adding to the cost of overseas travel and
purchases.

When making international purchases, consumers should be aware that the credit card used can add an additional 3% to the cost of the transaction.

"We often get questions about the cost of using a credit card for international purchases," says Bill Hardekopf, CEO of LowCards.com. "Like many fees for credit cards, it varies by issuer and can be confusing for consumers. If you have several cards, it is a good idea to compare the foreign transaction fees before you get on the plane. Since this is charged on every purchase that you make with your card, you
can save a few dollars by using the card with the lowest fee."

Visa and MasterCard charge a 1% processing fee. Then, the issuing banks add their own fee. This fee is charged after the conversion to U.S. dollars. Many cards charge 3% for the foreign transaction fee. However, Capital One and Discover absorb the processing fee and they do not charge a fee for foreign transactions.

Keep in mind that transactions you make with your credit card in a foreign currency (one other than U.S. dollars) will be converted to U.S. dollars. For example, a purchase that costs $200 Euros is converted to $314 US dollars. The
transaction fee will be charged as a percentage of $314 (Currency exchange fluctuates from day to day).

Here are examples of the foreign transaction fee that some
credit card companies charge:

* Capital One- Does not charge a foreign transaction fee

* Discover- Does not charge a foreign transaction fee. Keep
in mind that Discover is not accepted in many countries. If
you plan to use Discover, make sure it is accepted where you
are going. It is currently accepted in parts of Canada, the
Caribbean, Central America, Mexico, and China.

* Citibank-3%

* JP Morgan Chase-3%

* Bank of America-3%

* American Express-2%

* HSBC-3%

If you need cash, your best bet is always a debit card. Many
places in foreign countries have ATMs affiliated with Visa
and MasterCard. Before you leave, check to see if your debit
card issuer partners with a bank in the countries where you
are traveling. If you use ATMs from a partner bank, they may
waive the ATM usage fee which typically ranges between $1.50
to $5 . Keep the transaction receipts in case you need to
mail these in to your hometown bank to get them refunded.

You can use your credit card to get cash advances at ATMs
outside of the U.S., but this is not recommended because you
will be charged a 3% cash advance fee and a fee for ATM
usage, and possibly other finance charges.

Here are six tips for using a credit or debit card overseas:

1. You might want to charge larger purchases. Credit cards
typically provide good exchange rates so it could be cheaper
to charge a large purchase rather than paying for it out of
pocket. However, most cards also charge a 3% foreign
transaction fee so you might need to do a little math to see
if it is worth it. Also credit cards will provide you with
some protection if the product is defective or you have
other problems with the purchase when you get home.

2. Use debit cards at ATMs for cash. Debit cards used at
ATMs offer good exchange rates, but sometimes come with
fees. The typical surcharge is between $1.50 and $5 per
transaction. Some also add foreign transaction fees. Ask
your bank if it has banking partners that waive the fees.
Also ask your bank what you should do if the ATM only
recognizes four-digit PINs.

3. Do not use your credit card at an ATM to get a cash
advance. Cash advances charge significant transaction fees
and surcharges. Unlike regular purchases, cash advances
command a steeper interest rate that begins accruing
immediately.

4. Know the exchange rate. Local banks and some hotels are
the best places to exchange currency.

5. Keep some local currency and traveler's checks for
emergencies. It is a good idea to have some of the local
currency with you when you get off the plane.

6. Notify your bank and credit card issuer that you are
leaving the country.

Unique Way to Save on Gasoline Purchases

Just as analysts predicted, gas prices are quickly climbing toward $4.00 per gallon. This is a blow to many household budgets and consumers are looking for relief any where they can find it.
Consumers might be surprised to discover how much money they can save by using a gas reward credit card.

"Cash rebates on gas credit cards can actually add up to some significant savings," says Bill Hardekopf, CEO ofLowCards.com. "Some issuers give up to 5% cash back on your purchases, so it can be financially prudent to use these cards. But there are several pitfalls that consumers need toknow before applying for these cards."

The most important tip for consumers is to read the Termsand Conditions of any credit card you might be considering.

"Credit card issuers are brilliant marketers and can make any card sound very appealing. Many cards that advertise outstanding rebates for gas actually have "teaser" amounts that are only good for a short period of time. Others have a limitation on the amount of cash you will actually receive. Still other cards don't begin the significant rebate until you have made a certain amount of purchases on that card. It is important to read the fine print to understand what your rebate will actually be," says Hardekopf.

Most credit cards also have restrictions on where you buy gas to qualify for the rebate. In most cases, gas must be purchased at an eligible gas station. These are typically defined as stand-alone gas stations and not gas pumps at discount stores or warehouse clubs.

Here is a look at several gas reward cards and what a consumer would actually receive.
* Blue Cash from American Express advertises that you can earn up to 5% cash back at gas stations. "Unlimited rewards makes this one of the best cash rewards cards, including gas purchases. But you have to do a lot of spending to get there. If you spend less than $6,500 per year, then your rebate for general purchases, including gas, is only 1%,"says Hardekopf. "However if you spend over $6,500, then your rebate for general purchases and gas jumps to 5%. There is no limit to the cash back that you receive. After you hit $6,500, you will receive $2.50 for every $50 you put intoyour tank."

* Discover Open Road advertises 5% cashback on gas and auto maintenance. But this 5% rebate is limited to the first $100 in combined gas and auto maintenance each month. Hence, this 5% rebate on gas purchases can yield a maximum of $60 peryear. Other purchases yield a 1% cashback amount.

* Chase Perfectcard advertises a 6% rebate on gas purchases for the first 90 days. The rebate then decreases to 3% on gas purchases but there is a maximum rebate of $15 per month from these purchases.

* Citi Diamond Preferred Reward advertises that you will receive 5 points per $1 spent at gas stations. This offer is for 12 months, after that you will earn 1 point per $1 spent.

* BP Visa Rewards advertises a 10% rebate during the first two billing cycles on gas purchases made at BP stations. After those two months, you will receive a 5% rebate."Unlimited rebates makes this a good card if you frequently purchase gas at a BP station," says Hardekopf.
Only consumers that pay off their credit card balances each month should consider a gas rebate card.

"If you carry a balance on your credit card, look for a low rate card instead," advises Hardekopf. "You will save a lot more money if you get a card with a low rate and focus on paying down your credit card debt."

Do the Fed's Proposed Changes in Credit Cards Go Far Enough?

On Friday, the Federal Reserve released its proposal for prohibiting unfairpractices by credit card issuers. The provisions include:
* Prohibiting banks from applying payments above the minimum in a way that maximizes interest charges.
*Prohibiting banks from increasing the annual percentage rate on an outstanding balance unless certain circumstances apply,
* Consumers must be allowed to pay off the balance over a reasonable period of time.
* Prohibiting banks from imposing interest charges using the "two-cycle" method.
* Limiting the fees charged by subprime cards that reduce the available credit.
"These changes are very positive for credit card consumers. Some of these practices were unfairly penalizing consumers that carry a balance on their account," says Bill Hardekopf, CEO of LowCards.com.
"While this is a tremendous step in the right direction, there are three additional changes that could be made which would also benefit consumers.First, credit card Terms and Conditions need to be written in a way that most people can understand. Second, consumers need to be clearly informed of any proposed changes to their credit card rates and feeswith 45 days notice. Third, issuers should be prohibited from charging interest rates on fees.
"It will be interesting to see which of these provisions survive the process to become regulations that are passed by the Federal Reserve. The banks are likely to strongly protest the changes and try to dilute them or remove them altogether," says Hardekopf. "Many of these provisions are the focus of both the Federal Reserve and Congress. This means there is a good chance tha tsome of these suggested changes will actually stick. This is also an election year, and right now cardholders have the attention of the Federal Reserve and Congress. This is a good time for consumers to contact both to give their opinion about these proposals. However, even with this scrutiny of credit cards and attention to unfair practices, don't expect immediate changes. The process takes a long time and it may be at least a year before consumers actually see these changes take effect on their account."