Foreign Transaction Fees
If you purchase something in another country using a credit card from the United States, the bank may charge you a fee for converting the currency to U.S. dollars. For example, Bank of America charges a 3 percent fee on any purchases used with its credit cards [source: Bank of America]. So on an $80 purchase, the total currency conversion fee would be $2.40, and a $400 purchase would cost an extra $12 in fees.
Even though currency conversion costs are outlined in your account agreements, the fact that they are based on a percentage of your purchase means there's no limit on how high they can go. Fortunately, you can avoid this expense altogether by paying in cash. Order travelers checks or cash before you leave the country, or use an ATM while you're abroad.
Just be aware that obtaining cash in a foreign currency might also cost you. You just need to determine whether a one-time currency conversion fee is a better deal than the percentage rate that you'd be charged using your credit card the entire time you're abroad.