Currency Exchange Study

You can calculate an exchange rate by dividing the amount of the currency you start with by the amount of the foreign currency you'll get back. For example, if you have $100 and you get €80 back, your exchange rate would be 100 divided by 80, or 1.25 Euros per dollar. 

Most of the time, someone else will calculate the exchange for you. Credit cards automatically handle currency conversion when you make a purchase from a foreign merchant. However, understanding how exchange rates work is vital to make sure you don't get taken advantage of while traveling. There are a few more things you should know about the process, too.

Here's how to calculate exchange rates:

• Check your card network's website. 

The two worldwide card networks – Visa and Mastercard–  publish daily exchange rates from U.S. Dollars to all other major currencies. And those rates are quite a bit lower than what banks and airport kiosks charge for exchanging hard currency. In fact, using a Visa or Mastercard credit card with no foreign transaction fee can save you up to 9% on all your international spending, according to WalletHub's exchange rate study. 

Discover and Amex don't publish this information, but card network exchange rates tend to be very similar.

• Use the exchange rate formula.

The formula is: Starting Amount (Original Currency) / Ending Amount (New Currency) = Exchange Rate. For example, if you exchange 100 U.S. Dollars for 80 Euros, the exchange rate would be 1.25. But if you exchange 80 Euros for 100 U.S. Dollars, the exchange rate would be 0.8.

• Calculate the foreign currency amount.

It will generally be more useful for you to know how to calculate the amount of a foreign currency you'll get based on the exchange rate. You can do that with simple division. Divide your starting amount by the exchange rate to get the converted amount. For example, $100/1.25 = €80. 

While it's good to be conscious of exchange rates when you go abroad, using a credit card to automatically access the best conversion rates is a great way to make things simple and relatively inexpensive. 

Just make sure to avoid Dynamic Currency Conversion. That's when a foreign merchant converts your purchase total to U.S. Dollars, supposedly as a convenience but really to apply a high exchange rate and turn a bigger profit. So always pay in the local currency. 

There is one Visa exchange rate for every type of currency, which can change once every 24 hours. And that rate is automatically applied to any international transaction made with a Visa credit card or debit card. You can easily check the latest Visa exchange rates online to get an idea of what to expect when traveling.

Here's how to see your Visa exchange rate:

1. Go to Visa's online Exchange Rate Calculator.
2. Select United States Dollar for your card's currency.
3. Select the currency used by the merchant.
4. Enter your bank fee (foreign transaction fee), if applicable. Ideally, you should use a no foreign transaction fee credit card.
5. Put in today's date (the tool can't predict the future).
6. Click “Calculate Exchange Rates.”

Using a no foreign transaction fee Visa credit card when traveling abroad will save you up to 9% compared to converting hard currency, according to WalletHub's Currency Exchange Study. But a Mastercard will do the trick, too. There's actually not much difference between the exchange rates offered by these two worldwide card networks.

Lastly, you should always avoid Dynamic Currency Conversion (DCC). This is when a foreign vendor converts the price of a purchase to U.S. dollars, supposedly for your convenience. But that gives the merchant a chance to use an unfavorable exchange rate in place of the low rate you'd automatically get from Visa.

The Visa credit card exchange rate is the percentage that Visa applies when converting U.S. dollars to a foreign currency. Visa sets a separate exchange rate for all foreign currencies, and it can change daily. Visa also has an online exchange rate calculator to keep up to date on any rate changes.

The exchange rate is automatically applied to any foreign transaction using a Visa credit card. You will almost always receive a better exchange rate than you would if you were to convert cash at an international airport or hotel kiosk. And as a major global network, Visa cards are accepted in more than 200 countries and territories.

Here is how you can find the Visa credit card exchange rate:

1. Visit Visa's online exchange rate calculator.
2. Enter the currency amount, bank fee (foreign transaction fee), if applicable and today's date, or earlier. It is advisable to use a no foreign transaction fee credit card when making purchases abroad or from an internationally based merchant.
3. Select United States Dollar (USD) for the Card Currency.
4. Select the desired foreign transaction currency.
5. Click "Calculate Exchange Rates".
6. You should see the foreign currency converted into U.S. dollars, including any applicable foreign transaction fees.

When making foreign transactions, you should use a Visa credit card with no foreign transaction fee. Foreign transaction fees are 2-4% surcharges that are tacked on to any point-of-sale purchases outside of the United States, or purchases made through an internationally-based merchant. Capital One Venture Rewards Credit Card and Chase Sapphire Preferred® Card are a couple of the best Visa cards with a $0 foreign transaction fee.

You should also avoid any Dynamic Currency Conversion. This occurs when a foreign vendor will offer to convert the price of your purchase from the local currency into U.S. dollars. While it might appear to be a convenience, you should always decline the Dynamic Currency Conversion. The reality is, the merchant will use a rate higher than your Visa credit card exchange rate (as much as 7% higher), and pocket the difference.

The American Express exchange rate varies on the type of currency conversion you select at the time of purchase. So, there's a different Amex exchange rate between the U.S. dollar and approximately 80 other currencies, and they all fluctuate from day to day. Popular Amex currencies include the Canadian Dollar, the British Pound, the Euro, and the Mexican Peso. 

What you should know about the American Express exchange rate:

• The Amex exchange rate is automatically applied to international purchases charged to Amex credit cards. 
• American Express FX International Payments customers can access their accounts online to get the day's exchange rates. These rates are not available to the public, but you can enroll for free if you have a U.S. business bank account. An American Express card is not needed. 
• Exchange rates between the U.S. dollar and all other currencies fluctuate daily. But because American Express does not publish them openly, it's difficult to track them. Visa and Mastercard on the other hand, publish their exchange rates continuously. 

It's also useful to know that if you make a foreign transaction using your checking account, debit card or prepaid card, the exchange rates are the same as those used for credit cards.

The Petal 1 Card exchange rate is Visa's exchange rate on the date you make an international purchase. Visa exchange rates change on a daily basis, but they do not make their exchange rate public. The rates do tend to be quite low, however.

While credit card exchange rates normally also include foreign transaction fees, the Petal 1 Card does not charge foreign fees. This means the Petal 1 Card will save cardholders 1.52% on purchases with international merchants, compared to the average credit card offer. As long as cardholders avoid dynamic currency conversion, the exchange rates they'll pay on international spending with this card will be much lower than those they'd get from converting cash with banks, credit unions, or airport currency exchange services.

The Fit Mastercard exchange rate is Mastercard's exchange rate on the date you make a purchase, plus any foreign transaction fees. While Mastercard exchange rates change daily, the Fit Mastercard foreign fee is 0% the 1st yr, 3% after.

It's best to use a credit card with no foreign transaction fee when making purchases from international merchants. As long as you have such a card and avoid dynamic currency conversion, the exchange rates you'll pay on international spending with a credit card will be much lower than those you'd get from converting cash with banks, credit unions, or airport currency exchange services.

The usual credit card exchange rate used for purchases made abroad is 2-4%. Credit card networks (i.e. Visa, Mastercard, American Express, and Discover) generally use conversion rates based on interbank rates they select from customary industry sources on the business day prior to the processing date.

Visa and Mastercard provide calculators you can use to get an indication of the rate you may receive when using your card abroad.

Other things to know before using your credit card abroad:

When shopping abroad, a merchant may ask you if you would like to convert your credit card transaction from the local currency into U.S. dollars. This is called Dynamic Currency Conversion (DCC). This conversion rate is very expensive for the cardholder and should be avoided. Generally, when overseas merchants make this offer, they will use a conversion rate that is far higher than the actual going rate – as much as 7 percent higher.

When making foreign transactions, you should also be aware of foreign transaction fees. These fees are tacked on to any point-of-sale purchases outside of the United States, or purchases made through an internationally-based merchant. So, it's best to use a credit card with no foreign transaction fees in this case. Some good examples include the Capital One Venture Rewards Credit Card and Chase Sapphire Preferred® Card.

The Capital One Venture card's foreign exchange rate is VISA's exchange rate on the date you make an international purchase. VISA exchange rates change on a daily basis, and they update these rates each day on their website.

While credit card exchange rates normally also include foreign transaction fees, Capital One Venture does not charge foreign fees. This saves cardholders 1.46% on purchases with international merchants, compared to the average credit card offer. As long as cardholders avoid dynamic currency conversion, the exchange rates they'll pay on international spending with this card will be much lower than those they'd get from converting cash with banks, credit unions, or airport currency exchange services.

The Applied Bank Secured Gold Card exchange rate is Visa's exchange rate on the date you make a purchase, plus any foreign transaction fees. While Visa exchange rates change daily, the Applied Bank Secured Gold Card foreign fee is always 3% of each transaction in U.S. dollars.

It's best to use a credit card with no foreign transaction fee when making purchases from international merchants. As long as you have such a card and avoid dynamic currency conversion, the exchange rates you'll pay on international spending with a credit card will be much lower than those you'd get from converting cash with banks, credit unions, or airport currency exchange services.

The Chase Ink Business Unlimited Card exchange rate is Visa's exchange rate on the date you make a purchase, plus any foreign transaction fees. While Visa exchange rates change daily, the Chase Ink Business Unlimited foreign fee is always 3% of each transaction in U.S. dollars.

It's best to use a credit card with no foreign transaction fee when making purchases from international merchants. As long as you have such a card and avoid dynamic currency conversion, the exchange rates you'll pay on international spending with a credit card will be much lower than those you'd get from converting cash with banks, credit unions, or airport currency exchange services.