Ways to Save on Credit Card International Transaction Charges

12 MAY, 2023

International travel is an exciting experience that allows you to explore different cultures and cuisines. However, it may be difficult to understand how all that money just vanished. Allow us to assist you. Every time you swipe your card overseas, international credit card transaction charges apply. It can take a significant chunk out of your budget when it comes to paying for purchases abroad. In this blog post, we will discuss what credit card international transaction charges are, the standard fees, and how to avoid or minimise these charges.

What are Credit Card International Transaction Charges?

Credit card international transaction charges are fees levied on transactions made outside India. Credit card networks, such as Visa and Mastercard, and credit card issuers, such as Kotak Mahindra Bank, charge these fees for processing foreign transactions.

Credit card international transaction charges are typically a percentage of the transaction value, ranging from 1.99-3.55%.

Common Types of International Transaction Charges

The most common types of international credit card transaction charges include foreign transaction fees and currency conversion fees.

Foreign transaction fees are typically a percentage of the transaction amount. On the other hand, currency conversion fees are charged by credit card networks (MasterCard and Visa) for converting foreign currency transactions into the local currency of the credit card issuer.

How Credit Card International Transaction Charges Work

Let's understand this through an example. When you make a foreign transaction using your Kotak Mahindra Bank Credit Card, the credit card network processes the transaction. The network converts the transaction amount into the merchant's local currency, adds the applicable fees, and then converts the transaction amount back into your home currency.

Understanding how credit card international transaction charges work is essential, as these fees can significantly increase the cost of your purchases abroad.

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How to Avoid or Minimise Credit Card International Transaction Charges

There are several ways to avoid or minimise credit card international transaction charges when travelling abroad. Here are some tips:

Research credit cards: Before travelling, research credit cards that offer low or no foreign transaction fees. Kotak Bank offers several credit cards that waive foreign transaction fees, such as the Kotak Mahindra Bank Privy League Visa Signature Credit Card and the Kotak Mahindra Bank Royale Signature Credit Card.
Use cash: Cash can help avoid international credit card transaction charges. However, carrying large amounts of money can be risky, so it is essential to take the necessary precautions.
Use prepaid cards: Prepaid travel cards are another option to avoid international credit card transaction charges. These cards can be loaded with foreign currency and used for purchases abroad.

Advantages and disadvantages of using cash or prepaid cards:

Using cash or prepaid cards has its advantages and disadvantages. Here are some:

Benefits of using cash:

Widely accepted
No need for a credit card
No foreign transaction fees

Disadvantages of using cash:

Limited availability of local currency
No record of expenses
Risk of theft or loss

Advantages of using prepaid cards:

Safer than carrying cash
It can be used like a credit card
No foreign transaction fees

Disadvantages of using prepaid cards:

Limited acceptance compared to credit cards
It may not offer the same protections as credit cards
Fees for loading or reloading the card

It is essential to weigh the advantages and disadvantages of using cash or prepaid cards versus credit cards when travelling abroad to determine which option is best for you.

Conclusion

Planning and considering all options is crucial to minimise the cost of your purchases abroad. By understanding credit card international transaction charges and taking necessary precautions, you can save money on your next international trip.

Charges for international transactions can significantly increase the cost of your purchases abroad. It is essential to research credit cards with low or no foreign transaction fees and understand how these charges are calculated.

Using cash or prepaid cards can help avoid credit card international transaction fees, but they also have their advantages and disadvantages. Ultimately, deciding which payment method to use when travelling abroad should be based on your circumstances.

Also Read: What Is Credit Card Over Limit Fee?

Credit Card International Transaction FAQs

Q1. How much are international transaction fees?

The amount of international transaction fees varies depending on the type of card. Typically, international transaction fees range from 1.99-3.55% of the transaction value.

Q2. Can I avoid international transaction fees?

Yes, there are several ways to avoid international transaction fees. One way is to research credit cards with low or no foreign transaction fees, and another option is to use cash or prepaid cards (Kotak Konnect Card) for purchases abroad.

Q3. How do I know if my credit card charges international transaction fees?

You can check your credit card terms and conditions or contact us to determine if your card charges international transaction fees.

Q4. Are international transaction fees tax deductible?

International transaction fees may be tax deductible if incurred for business purposes. On the other hand, credit card fees for personal use are not tax deductible.