Author Topic: Opening a credit card just for No Foreign Transaction Fees  (Read 14400 times)

Chowder

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Hey everyone, I got a really rare chance to go see some family in Australia (I'm in the US) towards the end of this year and I'm thinking about opening a credit card just to take advantage of no foreign transaction fees.

Currently, it looks like foreign transaction fees are about 3%. My main concern is the amount of driving we will be doing and I'm responsible for fuel costs. I know cash is an option but the conversion rate is about 0.94 each way, so I see it as a lose-lose situation. I have excellent credit and I was wondering if it would be wise to open the card for the trip and then cancelling it after paying it off upon my return. What are your thoughts?

Quote
Why is this trip mustachian?
  • It would be a once in a lifetime trip for some, but to me it's an opportunity to revisit where I spent some time growing up
  • I'm only responsible for fuel & my airfare (some family is 8 hours inland from any major airport so biking isn't an option)
  • My mom & I will be staying with family and friends instead of hotels most of the time
  • I booked early, and my airfare has already been paid for

Self-employed-swami

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #1 on: May 19, 2013, 09:51:21 AM »
I seem to notice a trend from a lot of the newer posters, in that they feel the need to justify their decisions, when asking for advice.  If you were asking about buying a new car, I could see justifying it, but travelling shouldn't ever have to be justified; It is one of the joys in life!

I have no suggestions for your credit card question though, because I don't live in the US.

icefr

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #2 on: May 19, 2013, 09:54:35 AM »
Unless you have credit card debt, I'm not quite sure what's wrong with opening a new credit card for no foreign transaction fees. I plan on doing so myself later this year.

Another thing that I would look into is Charles Schwab's checking account offers free international ATM withdrawals. (Well free in that they reimburse them later.) I've got one of those as well, but haven't used it yet. Multiple people on the internet swear by it for international travel.

yyc-phil

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #3 on: May 19, 2013, 10:14:30 AM »
If the card you are thinking of getting has no annual fee, then it is a good idea to get it, and since it has no annual fee, just keep it after you pay off the balance for any future travel abroad. I am not in the USA so I don't know that particular card, but check this article here for more information on no foreign transaction fee credit cards:

http://www.nerdwallet.com/blog/top-credit-cards/no-foreign-transaction-fee-credit-card/

Chowder

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #4 on: May 19, 2013, 10:31:07 AM »
Unless you have credit card debt, I'm not quite sure what's wrong with opening a new credit card for no foreign transaction fees. I plan on doing so myself later this year.

Another thing that I would look into is Charles Schwab's checking account offers free international ATM withdrawals. (Well free in that they reimburse them later.) I've got one of those as well, but haven't used it yet. Multiple people on the internet swear by it for international travel.
I guess my main concern is turning around and cancelling it so quickly after opening the account.

If the card you are thinking of getting has no annual fee, then it is a good idea to get it, and since it has no annual fee, just keep it after you pay off the balance for any future travel abroad. I am not in the USA so I don't know that particular card, but check this article here for more information on no foreign transaction fee credit cards:

http://www.nerdwallet.com/blog/top-credit-cards/no-foreign-transaction-fee-credit-card/

I've been unable to find anything without an annual fee, other than my Discover (which isn't accepted in Australia), which is why I'd be looking at cancelling the card as I don't travel often. I wouldn't want the card sitting idle for years between trips.

Thanks everyone, and I suppose I'm justifying it to you as I'm still justifying it to myself.

Mountainman75

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #5 on: May 19, 2013, 11:24:48 AM »
We have two no transaction fee cards because we live in the EU.
Chase Sapphire and a State Department Fed Credit Union.
The Sapphire has an annual fee but it was waived for the first year, and the fee is minor compared to the savings we get from not paying transaction fees here in Europe.

For a single trip, not a terrible idea if you cancel it afterwards.

Jamesqf

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #6 on: May 19, 2013, 11:41:16 AM »
Seems like it would be a lot less hassle to just pay cash for stuff.

Questions I would have are first, can you even open a credit card account in Australia without being a resident, having a local bank account, etc?  Second, if this is a one-time (or fairly rare) trip, do you want to deal with the potential hassles that come from the US government's hubristic attitude towards foreign banks?  I'm currently having to close my foreign account because of that.

Chowder

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #7 on: May 19, 2013, 12:10:52 PM »
Seems like it would be a lot less hassle to just pay cash for stuff.

Questions I would have are first, can you even open a credit card account in Australia without being a resident, having a local bank account, etc?  Second, if this is a one-time (or fairly rare) trip, do you want to deal with the potential hassles that come from the US government's hubristic attitude towards foreign banks?  I'm currently having to close my foreign account because of that.

Oddly enough, I have dual citizenship but that's not my point here. It would be a US card I would be bringing with me.

chucklesmcgee

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #8 on: May 19, 2013, 12:52:57 PM »
Seems like it would be a lot less hassle to just pay cash for stuff.

Pay the ~6% transaction fee to convert your USDs into Australian Dollars, likely convert more than you'll actually end up using to avoid being SOL, then have to pay 6% on converting the excess AUDs to USDs coming back? I suppose it depends on just how much he intends to spend.

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Questions I would have are first, can you even open a credit card account in Australia without being a resident, having a local bank account, etc?

He's just looking to open a US credit card with no foreign transaction fees, from what I understand.


chucklesmcgee

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #9 on: May 19, 2013, 01:16:50 PM »
Opening a no foreign transaction fee card is probably a decent idea if you can't find a bank account that offers a no foreign ATM-fee withdrawal. A request for a new credit card will add an inquiry to your credit report and give you a slight ding for the next two years.

The exchange rates debit cards give at ATMs are highly-competitive, near FOREX rates. The catch of course is that you'll face some heavy ATM-fees and possibly additional foreign currency exchange fees. Find a free bank that offers no ATM-fee withdrawals and no foreign transaction fee. Chase was mentioned, and I'd like to add USAA. USAA does cover all foreign ATM withdrawal fees, even if their site indicates otherwise- I've had fees from every ATM-withdrawal automatically refunded to me, including dozens in Nepal, India and Sweden.

I'd suggest looking at the Capital One Cash Rewards card. No annual fee, no foreign transaction fee. ~1.5% back (1% comes with the standard cycles, 0.5% is actually awarded as an annual bonus).

As far as opening a credit card and then closing it, my question is why close it if you've already opened it? If there's no annual fee, you might as well hold onto it. Having an additional, essentially unused account open long-term will provide you with more credit history, increase your total available credit and decrease your credit utilization- all generally good things which will almost certainly outweigh the slight decrease in your average age of credit after 2 years. Plus you may decide to travel abroad again and this will save you from having another credit card inquiry.

penny

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #10 on: May 19, 2013, 04:17:32 PM »
I use the Schwab high interest checking account- no ATM fees or foreign exchange fees. Takes a $100 in a brokerage account to open, but it's not necessary to keep it funded.  I haven't found another way to get such a favorable rate of exchange, plus not pay any fees.  I also have a Chase Sapphire Preferred. The introductory offer bonus is equal to about 6 years of annual fees, and the first year is waived.

lhamo

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #11 on: May 19, 2013, 04:39:27 PM »
Unless you are a die-hard Dave Ramsey-ite or have issues with misuse of credit, I don't see why you are reluctant to open an additional credit card account.  We have several.  Our primary card is a Visa with our credit union.  that has a massive credit limit and accumulates points that we can redeem for cash, so I tend to use it for our daily spending on our US trips and for buying our tickets.  I also have a Capital One cash rewards that does not charge foreign transaction fees.  they are really stingy with the credit limit so I pretty much just use that for the occasional use here in China.  If you open a Captial One 360 account (used to be ING) you can get fee-free withdrawals from overseas ATMs.  The exchange rate is not bad, based on what I have seen here in China (though Chinese exchange rates are pretty strictly regulated by the Chinese central bank, maybe it would be different in AUS).  We also have an Amex Blue that we use mostly for Costco shopping.  And I recently opened a United Mileage Plus card to get 55k in miles that will eventually go toward an international ticket.

We always pay off our balances in full at the end of the month, and I have all my cards in my yodlee moneycenter profile so I'm not worried about credit card fraud -- it would show up immediately and all our banks have a policy of not holding you liable for fraudulent charges if you report within the stated timeframe. 

Nancy

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #12 on: May 19, 2013, 04:54:17 PM »
I also have the Charles Schwab checking account with no foreign transaction fees and reimbursed ATM fees. I love this account. However if you're strictly looking for a no annual fee and no foreign transaction fee credit card, there is the VentureOne rewards card from CapitalOne. I don't understand why you would be cancelling the card after the trip.

Southern Dude

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #13 on: May 19, 2013, 08:07:25 PM »
I suggest following chucklesmcgee's advice because I agree with everything s/he said. I live abroad and frequently travel throughout Asia for business.

- I use USAA for my banking, which enables me to draw from my checking account at international ATM's without having to pay ATM fees. They also give me a competitive FX rate.

- I use Capital One (Mastercard) when I charge things abroad. They provide the same FX rate as other credit card companies with no foreign transaction fees. They also have a miles/cash-back point system.

- From what I understand, having a non-delinquent line of credit will improve your credit score, as it increases credit history and improves your debt/credit ratio. I have three cards open and my credit score is bulletproof.

I would open the Capital One card, use it in Australia, and keep it open for future travel and/or emergencies. (If you find another good credit card with no international transaction fee, let me know.) The only other way you might come out ahead is to take a wad of USD with you and convert to AUD at a bank or money changer when you get to Australia. I would be shocked if you get a better rate after fees/commissions however.

travelbug

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #14 on: May 19, 2013, 08:38:37 PM »
We have one we only use for travel. It is with citibank and has no fees, no foreign transaction fees and you can use it as ATMs without fees as well.

It's well worth our while to have this card.

I just dump money in before we go and we can transfer whatever we want extra to it. It's a VISA and so can be used everywhere.

We are Australian and have had no problems using it in in any country we have visited yet.

smedleyb

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #15 on: May 19, 2013, 09:39:17 PM »
The Chase Sapphire preferred card has no foreign transaction fees.  Meet $3000 in 3 month spend requirement and receive 40,000 Ultimate Reward points.  Transfer points to United (one-for-one) for free one way ticket from PHL to SYD (roughly $1000 value).  Cancel before fee is due next year, or pay fee and attempt to acquire more points for future travel (and perhaps stack it with other cards like Chase United Card).   

Jamesqf

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #16 on: May 19, 2013, 10:54:49 PM »
He's just looking to open a US credit card with no foreign transaction fees, from what I understand.

Correct me if I'm wrong, but in my experience if there's not an explicit fee, they'll take the same amount of money in less-than-market currency conversions.

Sri C.

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #17 on: May 20, 2013, 12:27:44 PM »
Hey everyone, I got a really rare chance to go see some family in Australia (I'm in the US) towards the end of this year and I'm thinking about opening a credit card just to take advantage of no foreign transaction fees.

Currently, it looks like foreign transaction fees are about 3%. My main concern is the amount of driving we will be doing and I'm responsible for fuel costs. I know cash is an option but the conversion rate is about 0.94 each way, so I see it as a lose-lose situation. I have excellent credit and I was wondering if it would be wise to open the card for the trip and then cancelling it after paying it off upon my return. What are your thoughts?

Quote
Why is this trip mustachian?
  • It would be a once in a lifetime trip for some, but to me it's an opportunity to revisit where I spent some time growing up
  • I'm only responsible for fuel & my airfare (some family is 8 hours inland from any major airport so biking isn't an option)
  • My mom & I will be staying with family and friends instead of hotels most of the time
  • I booked early, and my airfare has already been paid for

This is a very useful resource: http://www.flyerguide.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange

NumberJohnny5

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #18 on: May 20, 2013, 04:00:01 PM »
Do you have a Bank of America checking account? If so, you can withdraw cash at any Westpac ATM in Australia with little/no atm fees, and using the actual exchange fee. I'd use that for all your cash needs, and a CapitalOne card for purchases where a credit card is desired.

beeth_oven

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #19 on: May 22, 2013, 11:45:11 PM »
I don't see why it would be such problem to cancel it after. Are you worried about it dinging your credit score?

Chowder

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #20 on: May 22, 2013, 11:55:05 PM »
I just have no interest in keeping another card in my wallet, especially since most of the ones I've seen have an annual fee.

Edit:

It looks like I can pick up the Capital One VentureOne card, I was only hesitant as I've heard mixed reviews about Capital One. My original plan involved the Chase Sapphire Preferred but CO seems like the better option (and I can keep the card.) Thanks everyone.
« Last Edit: May 23, 2013, 12:00:09 AM by StudentLoanSlayer »

lhamo

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #21 on: May 23, 2013, 03:53:44 AM »
I just got an email from United Plus Mileage Explorer that they will stop charging foreign transaction fees on June 1. 

They waive the fee for the first year, and you can get two free business lounge passes with a minimum spend in the first few months.  Plus free luggage allowance.  And mileage points and bonus.

vern

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #22 on: May 23, 2013, 04:24:06 AM »
Hey everyone, I got a really rare chance to go see some family in Australia (I'm in the US) towards the end of this year and I'm thinking about opening a credit card just to take advantage of no foreign transaction fees.

Currently, it looks like foreign transaction fees are about 3%. My main concern is the amount of driving we will be doing and I'm responsible for fuel costs. I know cash is an option but the conversion rate is about 0.94 each way, so I see it as a lose-lose situation. I have excellent credit and I was wondering if it would be wise to open the card for the trip and then cancelling it after paying it off upon my return. What are your thoughts?

Quote
Why is this trip mustachian?
  • It would be a once in a lifetime trip for some, but to me it's an opportunity to revisit where I spent some time growing up
  • I'm only responsible for fuel & my airfare (some family is 8 hours inland from any major airport so biking isn't an option)
  • My mom & I will be staying with family and friends instead of hotels most of the time
  • I booked early, and my airfare has already been paid for

This is a very useful resource: http://www.flyerguide.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange

That's a great link Sri C, thanks for posting!

I'm going to be doing some long term travel next year and was wondering how y'all pay your credit card bill while away?  (I'm kind of leery of doing it online while travelling.)


chucklesmcgee

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #23 on: May 23, 2013, 07:19:13 AM »
I just have no interest in keeping another card in my wallet, especially since most of the ones I've seen have an annual fee.

Who says you need to keep it in your wallet when you aren't traveling? I keep about a half dozen credit and debit cards locked away except for rare occasions.

icefr

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #24 on: May 23, 2013, 09:34:46 AM »
I'm going to be doing some long term travel next year and was wondering how y'all pay your credit card bill while away?  (I'm kind of leery of doing it online while travelling.)

I set it up on auto-pay recently.

In the past when I was traveling, I gave my mom my account info and asked her to pay it since I didn't want to pay it online while I was traveling either.

rugorak

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Re: Opening a credit card just for No Foreign Transaction Fees
« Reply #25 on: May 23, 2013, 01:10:41 PM »
It looks like I can pick up the Capital One VentureOne card, I was only hesitant as I've heard mixed reviews about Capital One. My original plan involved the Chase Sapphire Preferred but CO seems like the better option (and I can keep the card.) Thanks everyone.

I have the Capital one Venture card (the one without an annual fee as there is one that does have an annual fee) and for me they have been fine. I pay off my balances every month (usually 2-3 times a month) and have never had an issue. I actually ended up keeping it and getting rid of my old card. If the cash back card doesn't have the fees I would consider going with that. Especially if you still think you will get rid of it after the trip. At least that way you get the cash back instead of points. Only reason I haven't is I have all these points that I don't want to lose. And the most bang for the buck is to use them on travel at some point in time.