Changing money when you are traveling in a foreign country typically involves finding a currency exchange location, searching for a good rate of exchange and fretting over the hassle of carrying large amounts of money. Using your Visa card to withdraw local currency or make purchases is one way of solving these problems. Not only do most foreign banks and vendors accept Visa cards, but you also typically get a wholesale exchange rate.
In 1975, several bank cards such as BankAmericard, Barclaycard and Carte Bleue united under the new name "Visa." In the decades since, Visa has been adopted as one of the most common form of payment technologies in the world. You can use your Visa card to purchase products globally as well as to withdraw funds at any foreign bank that has adopted Visa as one of its forms of monetary exchange.
After the proliferation of ATM machines in the 1980s, foreign banks began to adopt the Visa standard at its own machines. If you wanted to get a cash advance on your Visa card or withdraw funds with your Visa-licensed bank card, you no longer had to go into the bank while traveling abroad. You simply withdrew funds in the local currency, and Visa extracted the funds from your account using a favorable wholesale exchange rate.
When you use your Visa card to withdraw funds or to make a purchase in a foreign country, the currency must be exchanged to withdraw the American dollars from your own bank. The rate of exchange that is used to make this transaction changes every day based on international currency exchange markets. The rate that you receive on a transaction is the rate that is established by Visa the day before your transaction. The official rate is selected from range of rates available in wholesale currency markets, including the government-mandated rate banks.
While there is no transaction fee charged by Visa directly to you, most commercial banks who issue Visa cards will charge you a foreign transaction fee as high as 3% of your transaction. One of the reasons for this is because Visa applies international service assessment (ISA) fees ranging from 0.15 to 1 percent to its financial institution partners for their use of the global payment system.
The benefits of using your Visa card for foreign currency exchange includes convenience, cost-effectiveness and global acceptance. Visa is accepted in more than 200 countries and territories. If you are in a foreign country and need to make a purchase, it is much more convenient to hand the vendor your Visa bank card than to go hunt down a local exchange location.
Its hard to argue against the fact that Visa doesn't charge you any fee for any foreign exchange transaction. Also, by getting the best international wholesale exchange rate available, you will always be getting a better rate than any local exchange office can offer.
Visa cards are of two types: credit cards or debit cards. Many bank cards can be used as both. Most vendors in foreign countries will not accept a bank card used as a debit card, but nearly all will accept it used as a credit card. For ATM transactions, it is generally better to use your bank card as a debit card as you will typically only be charged a flat fee for using the ATM as well as the foreign exchange rate fee. If you use a Visa credit card at an ATM, you will typically be charged both a cash advance fee as well as the foreign transaction fee.
The most important consideration when using your Visa to exchange foreign currency is the amount that your own bank will charge you for the transaction. Banks are always changing the fees they charge, so check before leaving on any trips. You might want to shop around at various banks and with credit card companies to see if any are offering foreign transactions without any fees.
