Foreign exchange 101, part two: Fees for credit card use - Page 2

AskEd & AnswerEd
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Editor's Note: This story was originally published on January 12, 2006. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: AskEd & AnswerEd, Ed Perkins.

Obviously, the spread between the best and worst deals on debit-card withdrawals is much wider than the spread among credit cards. The very best deals, such as Citi and the Global ATM Alliance, are as good as the best credit cards, while with the worst deals, you lose more than when you exchange currency or travelers checks.

Be clear about one additional fact: When you need local currency from an ATM, use a debit card, not a credit card. When you use a credit card to get cash, you're on the hook for a number of extra fees and charges.

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My overall recommendation remains the same as it has been for years: To minimize your exchange losses, put big charges on credit cards and use your ATM card for whatever currency you need. Even with a surcharge, you lose less with plastic than by exchanging U.S. dollars or travelers checks. But that advance is now conditional: It's valid only when you use the better credit card and ATM options and no longer as broadly applicable as before. Keep using plastic, but make sure it's the right plastic.

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