Card Sharks

Too many travelers return from overseas trips with an unwanted souvenir: a slew of unexpected fees for every purchase they made while gone.

Welcome to the sneaky world of foreign-transaction charges. It all starts with a flat-percentage transaction fee: 1 percent for MasterCard and Visa, 2 percent for Discover, and 2.7 percent for American Express. The bank that issues your credit card can also add its own transaction fee—sometimes as high as 3 percent.

Even if you haven't left the country, study your statement. A traveler recently told me she was billed hundreds of dollars in "foreign" trans-action fees on a cruise to Alaska—because the cruise company used a bank in Ireland. (She complained, and the bank refunded her money.)

So how can you get around the charges? Try these steps, for starters.

Fair Exchange

Never convert currency at an exchange counter, especially at an airport. The exchange rate is almost always way out of line. In general, getting cash with your ATM card yields the best exchange rate.

Use a credit card that doesn't charge a foreign-transaction fee. Capital One and the Schwab Bank Invest First Visa card, for instance, don't levy fees. Charles Schwab's High-Yield Investor Checking account reimburses ATM fees on cash withdrawals.

To avoid withdrawal fees, use a foreign bank that partners with your home bank. For example, Bank of America charges an astonishing $5 plus 1 percent for each withdrawal at most foreign banks. But the bank waives the fee if you withdraw from another Global ATM Alliance member, including Barclays in the United Kingdom, BNP Paribas in France, Santander Serfin in Mexico, and Scotiabank in Canada. Ask your bank if it has any foreign partners.

If you want up-to-the-minute information about money and travel, Bankrate.com keeps an updated chart on conversion costs (see article at bankrate.com/finance/money-guides/currency-conversion-costs-1.aspx). For comparisons of card charges, try creditcards.com or cardratings.com.