By LESLEY GRGORY
Are you shopping more frequently online? Internet purchases have surged in recent months. But one trap for the unwary is international transaction fees on purchases not in your home currency.
The fee is the cost of your card issuer converting the transaction from the currency of the purchase into your home currency. And it could cost you up to three per cent of the amount of the transaction.
It’s separate to the actual conversion rate, which isn’t likely to do you any favours.
A costly combination
Together, the conversion and the allied fee can eat up at least some of the savings you think you’ll get from shopping online.
And if you don’t pay off your credit card in full at the end of the month, you’ll being paying interest on a balance that includes not only your purchase but also those transaction fees.
Each bank and credit card provider decides what rate they’ll charge for international transactions, so do some homework on how much yours charges.
That said, there are a couple of ways to avoid international transaction fees.
— Don’t make transactions in foreign currencies
No, I’m not being cheeky. What I mean is that when you’re buying something from an overseas website, look to see whether you can change the currency you’ll be paying with. It’s much more common these days for a dropdown menu to appear where you can change it to your home currency. It’s good to see the price in a currency you understand, in any case. If you can’t change the currency, see if you can buy your item from another online store that allows this.
— Use a multi-currency card
These are commonly used for overseas holidays but, at a pinch, you could always use one at home to shop online. There’s a caveat though: You’ll save the international transaction fee on your other account, but do weigh up the costs of the multi-currency card itself.
Other traps to avoid
There are a few other traps when shopping online you should look out for. The biggest is probably international delivery, the cost of which can be enough to turn a bargain into something that breaks the bank.
Also, be careful when setting accounts to things like ‘1-click’ shopping. My biggest online shopping blunder happened when I failed to spot the high (very high) delivery fee because of an express checkout process. The delivery cost was more than the price of the item. I quickly changed that setting so it wouldn’t happen again.
It was a double blunder because I had failed to follow my own rule for online shopping – any shopping, in fact: Never shop when you’re tired (or hungry). The trouble is you can go online shopping at any time of the night or day, and I was shopping when my brain wasn’t firing on all cylinders.
So, don’t shop after dinner and watch out for those hidden costs of online shopping.
LESLEY GREGORY is an experienced personal finance and consumer journalist, based in Sydney, Australia. She regular writes for TEBI money and personal finance issues that aren’t directly related to investing.
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