[throwaway2037]

    no foreign transaction fees

In an FX transaction, what is the difference between a trading fee and a wider spread? Nothing. (Why do people keep falling for this?)

What you really want to see is a combined promise. For example: No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.)

Honestly, it is very hard to pay a total of less than 1% on foreign transactions. Still, this is pretty cheap, given the convenience.

[e63f67dd-065b]

The FX spread is fixed at around 25-50bps for Mastercard/Visa due to a settlement long ago. The foreign transaction fee is an additional charge on top of that, usually 3% of the gross transaction volume in USD.

The banks don't control the exchange rate, it's determined by the card network. So yes, when a card advertises 0% foreign transaction fee, it really does mean that they don't take an additional charge on top of the spread (which they don't control or profit from).

It's in fact quite easy to pay less than 100bps for a foreign currency transaction; everybody with a 0% FTF card is doing it right now (especially for high volume corridors like EUR/USD).

> No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.)

You bank can't promise what they don't control; Visa and Mastercard determines FX rates, and they're below 100bps because of an old settlement. So the bank is promising you something they had no role in creating; you're the one here falling for the marketing, not everybody else.

[yawn22222]

I think as a card provider you still make money on this, from what I remember the card provider can settle directly with the scheme for foreign transactions the next day. There's still a good margin on the mastercard rate, I've definitely observed more than 50bps spread, but that's GBP -> THB etc.. Would a fulltime forex trader cost more though?

[dublinben]

You can look up what MasterCard's conversion rate is: https://www.mastercard.us/en-us/personal/get-support/convert...

For a major currency pair, like EUR-USD or JPY-USD, you can see that it's less than a tenth of a cent off the 'real' rate.

[traceroute66]

> Honestly, it is very hard to pay a total of less than 1% on foreign transactions.

I would argue that you are not looking hard enough if you're paying 1% on FX card transactions.

All you need is a multi-currency card from one of the Fintechs, that will get you down to 0.5% or less without any effort.

Of course if you're the sort of person who likes taking cash out of ATMs on holiday then you'll have to look harder, since there is usually a surcharge on ATM withdrawls. But even then its not impossible.