Why You Should Use A Mastercard When Traveling Internationally

By: Ben Schlappig

Updated: May 3, 2023
Published: May 16, 2019

41 comments

Over the past several years we’ve seen the number of credit cards in the market with no foreign transaction fees increase drastically. This is great news for frequent travelers, and couples nicely with the global acceptance of credit cards increasing as well.

Not only can I now make credit card purchases abroad without incurring foreign transaction fees, but in many cases I can also earn a huge number of bonus points. For example, you can earn bonus points on not just international airfare and hotel purchases, along with things like dining, parking, taxis, public transportation, etc.

While a lot of cards have no foreign transaction fees, that doesn’t actually mean you’re getting the same deal on all cards. The exchange rate can vary based on which card you’re using.

MileValue links to the online tools which allow you to see the daily exchange rates being used by Mastercard and Visa:

This reveals some interesting things:

“No foreign transaction fees” doesn’t always mean you’re getting a fair rate

It’s easy to assume that “no foreign transaction fees” means you’re getting the market rate, but that’s not necessarily true. If you were truly getting the “fair” exchange rate, then the conversion rate would be roughly the same going from Currency A to Currency B as it is going from Currency B to Currency A. But that’s not the case.

Let’s look at the Visa currency conversion tool, for example. According to it, 1USD converts to 0.886358EUR.

Logically you should be able to divide 1 by 0.886358 to get the conversion rate from EUR to USD. 1/0.886358 is 1.1282USD per EUR. Yet the conversion rate when going back is 1.138186USD per EUR. So that’s a spread of ~0.89%.

So let’s look at the same for Mastercard. 1USD converts to 0.880592EUR. Logically you should be able to divide 1 by 0.880592 to get the conversion rate from EUR to USD. 1/0.880592 is 1.135599USD per EUR. Yet the conversion rate when going back is 1.135301USD per EUR. That’s a spread of only ~0.02%, which is much better.

As you can see, MasterCard’s conversion rate is much fairer, in this instance.

Does Mastercard really have better exchange rates?

I figured I’d look at the exchange rates for some random currencies to see whether Mastercard really has better exchange rates than Visa. Here’s a table with a few examples:

Value per USD	MasterCard	Visa
AUD	1.37855	1.36421
EUR	0.880592	0.87859
GBP	0.693193	0.69154
HKD	7.7633	7.7592
JPY	108.5	108.5069
RUB	64.7	64.6
SGD	1.3755	1.36944
ZAR	15.035	14.9941

As you can see, Mastercard’s exchange rate is better in all instances, except with the Japanese Yen, where Visa is slightly better.

Rumor has it that the reason for this discrepancy is as follows:

Visa guarantees the exchange rate the day you make the purchase, but has a built in cushion since the transaction typically only posts a couple of days later, so exchange rates could change, meaning there’s some risk for Visa
Mastercard charges the exchange rate the day the transaction posts (often a couple of days after the transaction), so since they’re charging whatever the rate is, the cushion is much smaller

Bottom line

In the past I’ve always decided which card to use abroad based on which offered the best rewards. I never really considered that the exchange rates can vary pretty significantly among cards without foreign transaction fees.

While there are some instances where Visa may end up being cheaper due to a change in conversion rates, from hereon out I’ll be using Mastercards for all my international purchases. That works out great, since there are several rewarding points cards that run on the Mastercard network.

Use these Mastercards when traveling internationally:

Citi® / AAdvantage® Executive World Legend Mastercard®

Learn More Terms Apply. | See Rates & Fees

Earn 1 Loyalty Point for every 1 eligible AAdvantage® mile earned from purchases
Admirals Club Membership
No Foreign Transaction Fees
$695

Citi® / AAdvantage Business™ World Elite Mastercard®

Learn More Terms Apply. | See Rates & Fees

Earn 2x AAdvantage miles on eligible American Airlines purchases
First Checked Bag Free
American Airlines Companion Certificate
$99, waived for first 12 months

Have you ever considered exchange rates used by different cards when deciding which card to use abroad?

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MC Guest

June 21, 2019, 4:28 am

Totally correct, backed up by https://www.moneyhub.co.nz/mastercard-vs-visa.html - difference on average around 1%

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James Guest

October 13, 2018, 1:24 pm

I just used my Capital One MasterCard for the first time in China. My copy of the receipt had an option to tick to choose USD or RMB, but there was a note that no signature is required because the amount is less than 1,000 RMB. I asked the merchant to make sure the charge was in RMB but they said they have no control over this. I suspect this is a case of hard coded DCC. I will make a dispute if the posted charge is the USD amount indicated on the receipt.

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Melissa Rossi Guest

September 11, 2016, 8:33 am

Thank you for this informative post. However, Mastercard's rates--which they say they derive from Bloomberg, Reuters, etc--are almost always higher than their sources' rates. They post the previous day's rates, and then "explain" in twisted bank language that maybe this is or isn't the rate that day. This is bs, people. And then most banks tack on 3 percent over that horrid rate--in fact my bank tack on 3.4 percent, which isn't legal. I'm making complaints about this everywhere--including to the relevant federal agencies. Banks need to be TRANSPARENT about the rate THAT DAY. Why is this a guessing game. And, trust me, look at the rates--tack on 3 percent--and still the banks/credit cards are probably charging more. Be aware people. Start questioning your bank. And MC isn't doing us a favor with their rates--they take the highest or near highest from the day before. DEMAND CLARITY AND TRANSPARENCY. Well, I am.

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Joe Guest

May 18, 2016, 9:34 am

@swc > I’ve complained to Citi, but they say there’s no mechanism to dispute DCC. Very untrue. If I authorized XXX 100 (where XXX is the local currency) and the charge comes through as USD 150 through the unauthorised use of DCC I routinely dispute the entire amount, which I never authorized, inviting the merchant to repost the authorized XXX 100. It works every time, with the benefit that not always the merchant reports the charge so I actually "make" money on the deal. I suggest everyone does the same to contact this fraud. I've also learned to be very explicit whenever I am offered a receipt with the two currencies: not only I select the local currency, but I cross off the USD amount, cross off all the preprinted DCC language, and write "No DCC" on top of the signature. This has reduced the number of fraud significantly, as I think the merchant is inclined to think twice before putting it through as DCC.

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Kent Guest

May 18, 2016, 8:30 am

@Michael C: Technically sound advise. Practically can be tough when you are away on long biz trips and when FOREX rates are updated regularly (in some cases every 12 hours by some banks). Practically, I have never seen much difference in my expenditures regardless of the card used so it seems like a task not worth too much spent time on.

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