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Should I Pack the Amex, Mastercard or Visa?

Probably the first thing you should do is to put down the Discover. You’re going through your wallet, trying to figure out which card to bring, right?

There’s a couple of reasons why you should lean toward credit cards for paying for purchases overseas. First of all, you don’t get slammed with any fees, if you’ve taken the time to hunt down a card that has no foreign transaction fees. You also get the best rates. Most of the time, it’s also accepted everywhere. Like, about 85% of the time. Cash also has this amazing acceptance rate, at about 100%.

That’s the key thing, isn’t it? Though you’ve got your choice between Discover, American Express, Visa or Mastercard, the main things you’ll have to factor in are how widely accepted each card is and what kind of foreign exchange rate they impose on you. Most of the time, this is set through these guys and not the card issuer, so we did a little research to figure out the best one of the bunch.

It shouldn’t come as a surprise that American Express and Discover are hit-and-miss when it comes to getting accepted. I can barely pay for certain items with those two types of payment here. This is ironic, since Amex actually has some decent travel cards that give great bonuses to its users. To put a sweet cherry on top, it reportedly has one of the worst foreign conversion rates between the four, charging about 2 to 2.7 percent. As with all things, this will probably vary across the board depending on what card you have.

American Express users tend to get the most unofficial perks, though: one burger joint in Hong Kong shaved 10% off your final bill if you used your Amex card, along with a host of other discounts from other vendors. Not too terrible. But, generally, I find American Express’ acceptance more often the exception than the rule, rarely justifying the sign-up. Discover, meanwhile, standard-wide has no foreign conversion or transaction fees, but its lack of usability pretty much makes it a moot point. So much for that.

Mastercard and Visa, on the other hand, are like the best buds that have your back. Though myth suggests Visa is more accepted worldwide, the truth is that MasterCard is just as prevalent as its competitor. You can’t really go wrong with either one. But how do the two stack up against each other, in terms of having a decent exchange rate?

To figure out the winner, I threw my Capital One Mastercard* and my Charles Schwab Visa together in the ring to compete for the title. Since both have no foreign transaction fee, I could compare notes from purchases made in Hong Kong. Hong Kong is actually an ideal testing ground (if there ever was one) because the Hong Kong dollar is pegged at a fixed rate to the U.S. dollar (1 USD to 7.76 HKD). In a world where foreign currency fluctuates faster than you can say economic recession, this gives us a slightly more accurate gauge.

(*If you can, go with Capital One – they tend to perform the best overseas, but can be stingy with credit limits. They’re also one of the few companies to eat the typical Visa and/or Mastercard charge.)

To spare you the hassle of looking at various spreadsheets, I’ll compare two transactions that pretty much epitomize what I found. One transaction on my Visa  occurred over  Restaurant Week, where I knocked back some crab cakes for the stomach-satisfying price of HK$282.2. The final amount posted to my bill as US$36.62, putting the exchange rate at 7.72 HKD. Meanwhile, I switched over to the Mastercard another night to entertain some out-of-towners for HK$616. While that night ended up being kind of foggy, the final damage was US$79.50. That’s an exchange rate of 1 USD to 7.75 HKD. Unofficially, the Mastercard performed better.

But, hey! Just so I know it wasn’t my individual experience, this brief Fatwallet analysis also took it upon themselves to  hash out the Visa and Mastercard debacle. One poster compares the results of a Citi MTVU Visa and a Citi Premier Mastercard side by side on a stay in Indonesia. The results? Mastercard tended to yield a better exchange rate consistently. It wasn’t, however, consistent in how much better it outperformed Visa. The rate fluctuated anywhere from being 0.2 percent to a full 1 percent better – something fairly consistent with my own findings.

At any rate, the differences between Visa and Mastercard are pretty marginal. It’s important to note exchange rates are almost always in a constant state of flux and it’s possible, that at different times, the Visa rate can be better depending on how quickly the banks respond. The difference isn’t nearly important or substantial enough to apply for one type of card or bring a slewful of Mastercards and Mastercards only. (Trust me, diversify your wallet for emergencies.)

Though it depends on what other rewards you get from your credit card, I’d probably be more likely to reach for a Mastercard first. But it wouldn’t stop me from reaching for a Visa either.





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