MasterCard and Visa Offer Travel Savings Amid Economic Turndown
The major credit card companies' automatic currency exchange has a better rate than major banks and airport conversion.
Save Up to 15% on Business Travel and Maintain Overseas Relationships Amidst Financial Uncertainty
It's no secret that the travel industry is highly correlated to the health of the general economy, but the results of a study by Deloitte's Tourism, Hospitality & Leisure practice show just how important the nation's financial outlook is to business travel. While 37% of business travelers cut back on travel expenses during the Great Recession, 79% of respondents believed they would end up spending the same or more on business travel in 2011 than they did in 2010. 24% said they'd travel more frequently, given the promising state of the economy in September '10, when the survey was conducted.
Given the resurgent speculation about a double-dip recession, however, a lot of us might be rethinking our travel plans. But this might be premature for those of us on the fence, especially in light of a recent Card Hub study that revealed you can save up to 15% on international business travel just by selecting the right method of payment. Those savings, after all, could make all the difference in maintaining crucial overseas relationships during financially tough times.
Currency Conversion Study
Card Hub's study examined the cost of converting U.S. dollars to Euros automatically via MasterCard (MA) or Visa (V) as well as in cash at 15 major U.S. banks and Travelex, the world's leading airport currency conversion company. The study not only revealed that Visa and MasterCard provide the best exchange rates, but that currency conversion done via plastic is 7.9% cheaper than converting cash at banks and 14.7% cheaper than doing so at a Travelex airport location. Since exchange rates are applied to all transactions processed through foreign merchants, this information can help you save on a variety of expenses related to a trip abroad, from flight and hotel reservations to dining, transportation, and business services (e.g. conference expenses, internet access, etc.).
In addition to getting a MasterCard or Visa card, there are still other steps a business traveler can take in order to maximize savings?
What You Need to Do
- Opt for a no foreign fee card: The Visa or MasterCard that you get should be a no international fee credit card, as it will allow you to avoid the 3% international usage fees that over 90% of all credit cards charge. It'll also save you up to 15% on currency conversion relative to any other option.
- Open an international debit card account: Employees traveling abroad will need cash, and accessing it with Visa's or MasterCard's exchange rate is preferable to exchanging money at a bank.
- Avoid dynamic currency conversion: Foreign merchants are known to offer a "service" called dynamic currency conversion to tourists, whereby they inflate purchase totals by as much as 10% by using unfavorable exchange rates to convert the cost of a purchase into U.S. dollars. Unsuspecting business travelers often see this as a convenience because they can bring back receipts for reimbursement that show purchases in terms of dollars. But given that conversions will be shown on your credit card statement anyway, this is truly unnecessary and you should make sure to only sign for purchases expressed in the local currency.
Final Tips & Conclusion
While it might seem like a rather minor detail, you must not forget to clue your credit and debit card issuers to the general details of your itinerary. Plastic won't work in foreign countries your issuer isn't aware you'll be traveling to. What's more, credit card companies have support staffs -- either the general customer service department or small business specialists -- that can help solve any issues you or your employees encounter while abroad, so it wouldn't hurt to get their international toll-free numbers.
Finally, it's important to recognize the importance of this strategic currency conversion plan to all of your dealings with foreign merchants, even when travel isn't involved. Instead of allowing merchants to institute their own exchange rates for wire transfer payments, ask to pay with a credit card and save in the exact manner outlined above. Your wallet will surely thank you!
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