I just noted that my Norwegian Nordea's Visa Debit card's spread is 2,56% when I pay my shoppings with it in Estonia:

>>> a=7.33      // Google showed this course in its search by 1 EUR in NOK
>>> b=7.52      // currency course shown in netbank
>>> ave = (a+b)/2
>>> diff = b-a
>>> diff/ave

I have an intuition that to use the credit card minimize the spread cost. However, not sure yet, since no personal experience. I have also Mastercard, which costs me about 8 euros every month, when I do nothing with it. I will get it soon to my hands so I can test it.

How do you minimize the spread costs of shoppings in North or Europe?

I am particularly interested in the countries: Finland, Norway and Estonia, but I can travel if it will save me a percentage of money in every shopping.

  • My experience is that credit cards provide the best exchange rates other than carrying large amounts of cash and shopping at exchange stores. I have experience with several different currencies including EUR, and of Northern Europe I've travelled to Denmark and used my CC's there. – littleadv Dec 21 '12 at 18:59

The location that you are purchasing from is not really relevant. If you use either a Visa or MasterCard to make a payment in a foreign currency of any kind then your payment will automatically use Visa/MasterCard's FX platform. Whilst fees can vary between issuers, the fee is generally fixed at 2.5%.

There are occasionally credit card issuers who have special deals to remove these fees, but they tend to come and go and availability will depend on your country of residence.

The only real way to avoid the fee is to get access to a debit or credit card denominated in the currency you wish to use for your purchase. This is often achievable for USD or EUR, but much harder for smaller currencies. You would have to try contacting a bank in that country to see if they would open an account for you or attempting to purchase a pre-paid credit card online.

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  • You'll still have to exchange the currency, and unless large amounts are involved, the spread is likely to be larger. MC/Visa can allow such a small spread because of the huge amounts they're converting daily. – littleadv Dec 21 '12 at 22:08
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    Visa and MasterCard will certainly have excellent spreads, but they don't pass those on to you and me. What you're really getting is a tight spread plus 2.5% commission. Whilst I agree that you would need to be spending a reasonable amount to make it worth your while, I wouldn't call Visa's rate "good". I wonder what the minimum you'd have to spend would be to beat 2.5%. I would expect not too huge an amount. – thepassiveinvestor Dec 21 '12 at 22:27
  • I'm not so sure about the 2.5%. Here in the US 3%-5% is more common, but some cards have 0% - those designed for people who travel. In other countries there are cards that provide 0% fees over the exchange rate, and I even had a card that would use the central bank official exchange rate - can't get better than that anywhere (that was actually somewhere closer to the OP than to the US). – littleadv Dec 21 '12 at 22:29
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    2.5% is the most common number I've seen. Certainly 0% exists, there was a Nationwide credit card in the UK which offered it for a while but it was eventually withdrawn. Either way I agree with your premise, just stick to credit cards unless you're spending a large amount of money. – thepassiveinvestor Dec 21 '12 at 22:34

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