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Arbitraging credit cards while traveling abroad

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Re: Arbitraging credit cards while traveling abroad

#21

Post by aianus »

roel_v wrote: post #12

It's sad that I have to say this in 2015, but the cheapest way to deal with money oversees is to... use cash as much as possible. It's not as convenient (although, everybody takes cash, credit cards - depends on where you go...), but taking a wad of cash for trips <= 1 week or making weekly withdrawals for travels longer than that is usually by far the cheapest option.

As somebody who travels a lot credit cards are much, much cheaper than cash. It's not even close. Banks / exchange shops have commissions (baked into the exchange rate) from 2.5% to 5%.

My credit card charges $5 flat fee to take out cash, gives spot forex rates, and gives me 1% cashback on purchases. So if I take out $500 cash and spend $500 directly on the card I pay zero fees versus the $25-$50 in fees I'd spend dealing with $1000 cash.

Re: Arbitraging credit cards while traveling abroad

#22

Post by aianus »

jackgavigan wrote: post #16

You also need to factor in any foreign currency fees your card issuer imposes. For example, in the UK, most banks impose a "non-sterling transaction fee" of 2.75-2.99% on transactions in a foreign currency. There's a UK startup called Revolut - www.revolut.com - which allows you to hold GBP, USD and EUR on the same (pre-paid debit) card and convert money between them at mid-market rates, using an app. It's pretty sli…

> You also need to factor in any foreign currency fees your card issuer imposes.

He's specifically referring to cards that offer spot forex rates. There are many such options in the U.S.

Re: Arbitraging credit cards while traveling abroad

#23

Post by shivpatelssp »

aianus wrote: post #2

This would only be arbitraging if you were buying something on one card and returning it on another card. It's not arbitrage if you're not making a profit, it's just saving. Nice cost-comparison tool though :)

Great point! Wrong choice in words; will edit the post to make better sense. Also looks like someone else edited the title of this post on YC. Any idea how to change it back?

Re: Arbitraging credit cards while traveling abroad

#24

Post by shivpatelssp »

jannotti wrote: post #20
jakozaur wrote: post #10

Nice trick, though not that practical. 1% of oversee spending may be to little benefit for the cost: 1. Get more than one card with zero foreign transaction fees. Make sure you won't get charged yearly fee on those. 2. On every transaction, check the rate on smarthphone. Oh, you want to buy $3 coffee, let me check my rate to see if I can save $0.03. 3. More cards is more monitoring hassle. Harder to track, more hassl…

I think, but I'm not sure, that you're overstating the complication. Looking at your four steps: 1. Everyone should have two credit cards. You don't want a single point of failure (mistaken fraud freeze, for example.) 2. You only check every day, not every transaction. 3. Again, I argue you should have two (Visa + Mastercard) 4. Again. You're just trying to make things sound hard by repeating the same thing. So. Have…

@jannotti Couldn't have explained it better! Only clarification I'd make is you can use this for more than two cards.

Re: Arbitraging credit cards while traveling abroad

#25

Post by roel_v »

aianus wrote: post #21
roel_v wrote: post #12

It's sad that I have to say this in 2015, but the cheapest way to deal with money oversees is to... use cash as much as possible. It's not as convenient (although, everybody takes cash, credit cards - depends on where you go...), but taking a wad of cash for trips <= 1 week or making weekly withdrawals for travels longer than that is usually by far the cheapest option.

As somebody who travels a lot credit cards are much, much cheaper than cash. It's not even close. Banks / exchange shops have commissions (baked into the exchange rate) from 2.5% to 5%. My credit card charges $5 flat fee to take out cash, gives spot forex rates, and gives me 1% cashback on purchases. So if I take out $500 cash and spend $500 directly on the card I pay zero fees versus the $25-$50 in fees I'd spend de…

What card is that, and with which bank, if any? I don't have any cards with a flat fee (both Mastercard and Visa).

Re: Arbitraging credit cards while traveling abroad

#26

Post by aianus »

roel_v wrote: post #25
aianus wrote: post #21

Earlier quoted context omitted.

As somebody who travels a lot credit cards are much, much cheaper than cash. It's not even close. Banks / exchange shops have commissions (baked into the exchange rate) from 2.5% to 5%. My credit card charges $5 flat fee to take out cash, gives spot forex rates, and gives me 1% cashback on purchases. So if I take out $500 cash and spend $500 directly on the card I pay zero fees versus the $25-$50 in fees I'd spend de…

What card is that, and with which bank, if any? I don't have any cards with a flat fee (both Mastercard and Visa).

Amazon.ca rewards Visa card from Chase: https://www.chase.com/online/canada/amazon-ca-home.htm

I was wrong, it's 1% per cash advance with a minimum of $5. I've never taken more than $500 in cash out at a time so that's how I remembered it. Also, the above calculations assume you overpay the card beforehand so you don't incur interest charges.

Re: Arbitraging credit cards while traveling abroad

#27

Post by jackgavigan »

aianus wrote: post #22
jackgavigan wrote: post #16

You also need to factor in any foreign currency fees your card issuer imposes. For example, in the UK, most banks impose a "non-sterling transaction fee" of 2.75-2.99% on transactions in a foreign currency. There's a UK startup called Revolut - www.revolut.com - which allows you to hold GBP, USD and EUR on the same (pre-paid debit) card and convert money between them at mid-market rates, using an app. It's pretty sli…

> You also need to factor in any foreign currency fees your card issuer imposes. He's specifically referring to cards that offer spot forex rates. There are many such options in the U.S.

In the UK, the non-sterling transaction fee is separate from the currency exchange.
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