U.A.E. Consumers Risk High Bank Fees When Traveling Overseas

Millions of U.A.E. consumers are packing plastic for holiday travel, but if they don’t spend carefully they could come home with more bank fees than expected.

A recent report by Visa indicated that an increasing number of U.A.E. shoppers are reaching for payment cards for summer travels. Card usage is generally becoming more popular across the Middle East, but according to Ashok Sardana, managing director of the Continental Group in Dubai, consumers need to be prudent with paying by card overseas or they may face doubled fees. Shoppers need to understand how extra charges can rack up, and which cards are best to use when traveling abroad.

“It’s a known fact that people prefer using their credit cards when they are out on a vacation,” Sardana told Gulf News. “The primary reason for relying on credit cards is because it is a lot safer and [more] secure than carrying cash. However, a lot of people fail to realize that the convenience of using credit card abroad comes at a price.”

Gulf News reported that making purchases on payment cards is expensive largely due to the exchange rates added on to transactions. Most banks in the U.A.E. and many other countries often charge foreign currency transaction fees that range from about 1.5 percent to 2 percent with each payment.

Charges can also accumulate when customers use cards to withdraw cash at ATMs. Again, most banks charge a withdrawal fee—commonly known as a cash advance fee—which averages from 2.5 percent to 3 percent while other banks have a fixed amount. Gulf News recommends that consumers should steer away from using credit cards for taking out cash, unless there is an emergency situation or a lack of payment options.

According to Sardana, U.A.E. travelers should consider signing up for a prepaid card or travel card to make when purchasing outside their home country. Prepaid cards have similar qualities as credit and debit cards, and are also convenient for payments. A significant difference is the notion of having a spending cap which is beneficial for consumers who need helping budgeting or seek to avoid high bank fees.

“Travel card users can load the card upfront in the prescribed currencies. Most of these have the exchange rate lock facility which means it protects the user’s money loaded in the card from any currency rate fluctuation during travel,” explained Sardana.

Additionally, there are several other tactics for shoppers looking to save themselves from hefty card fees. The report states that it is cheaper to withdraw cash using a debit card as opposed to a credit card because there is no cash advance interest charge and credit card transaction fees are higher. If shoppers need to take out cash, then using a debit card is the best option for saving money. Consumers should also do more research about the different financial products that their bank offers. Different card accounts apply various foreign transaction fees. Customers need to read over account agreements to find out what these fees are to help them determine which cards are best for traveling purposes.

Finally, Gulf News notes that travelers must be cautious of merchants who ask to charge in foreign money or U.S. dollars. This is a common tactic for merchants all over the world, and currency conversions lead cause many shoppers to be ripped off.

There is a lot to consider before preparing to leave the country and how you choose to make payments abroad should be of high priority. Bank charges are often inevitable, but with a little research and thoughtful planning consumers can easily mitigate these fees.

To read the full article at Gulf News click here.