I live in Poland. Recently, banks have raised fees for card payments in foreign currency. I've heard that a good way to go around it is to buy USD and pay using it (except for eurozone and UK).

But that got me wondering, is paying with an USD card cheaper than paying with an EUR card (outside US and eurozone, say, in Mexico or Japan)? I earn neither of those currencies, but an EUR card seems more practical, (since I'm way more likely to travel to eurozone). Of course, I can get both.

What if I could get either USD or EUR spread-free (from relatives who earn one of those currencies)?

1 Answer 1


Well, you've partly answered your question already.

There are two key components to foreign card transactions:

1) Foreign currency transaction fee (it is usually fixed, however some banks may not charge this, but rather have higher spread - you need to check with your bank)

2) Exchange rates

Also, banks may have all sorts of extra charges such as an ATM withdrawal fee for example.

The FC transaction fee is charged when, say, you make a JPY purchase with USD or EUR. This transaction will also involve some loss on x-rate (to convert USD or EUR to JPY obviously). But before you buy JPY, you will have to buy USD or EUR with PLN.

Because you said you are more likely to travel to Europe it is then rational to use a EUR card as it won't involve a FC transaction fee. You will still have to convert PLN to EUR, or if you have income in EUR or USD you have nothing to worry about then.

In practice there is no such thing as spread-free exchage rate. Every institution that sets xrates has to cover its expenses - this includes both governments and banks. Assuming your relatives do not gift you the currency, they will have to exchange PLN you send them back to USD or EUR which would in turn involve a financial intermediary.

One may also consider calculating the exact benefit of using either USD or EUR card abroad, say, Japan. However, usually the difference is insignificant for day-to-day expenses because the market mechanism ensures that there is no free profit opportunity available. If there happens to be a gap and an opportunity for free profit (i mean converting currency A to currency B then to currency C and back to currency A, pay for all the transaction fees and still make some profit) such an opportunity will be quickly closed off by tradebots and FC market will be in equilibrium again instantly. If this argument is not strong enough for some reason, consider another one - assuming you are getting FC card for long-term then constant x-rate fluctuations would make it almost impossible to predict which currency would have more purchasing power in the future. You could, ofcourse, hedge but this is another story and barely related to consumer cards.

Long story short, the first scenario includes double conversion plus a FC transaction fee, whereas in the second case scenario you only convert once and spend without any FC transaction fee. It could be that you may happen to travel to Japan with EUR card, in this case you would be subject to double conversion and a transaction fee as in the first scenario. Therefore it is rational to use EUR card, as you if you were using USD card you would be sebject to double conversion within the EU. Alternatively, if you are more likely to travel to US you would be better-off with a dollar card.

To summarise - the more conversions you make the more you lose. And if you somehow managed to calculate that today you are better-off with a USD card - everything could change tomorrow.

  • By spread-free exchange I meant the case when I have a relative who earns (some) foreign currency but needs PLN (at least periodically). In case of such exchange, we both save on spreads (on the other hand, one or both of us loses the opportunity to take advantage of varying exchange rates).
    – tomasz
    Apr 23, 2015 at 23:06
  • 1
    Also, an important thing to keep in mind are the specific conversion rules for the cards in question (which requires some digging). For example, in the online bureau de change I'm considering, if I pay in a currency which is not the currency of the card, the value is converted to USD using MasterCard rates (which are effectively spread-free, as far as I'm concerned) and then converted from USD to the currency using the exchange rates of the associated bank, which are way worse than the bureau's (spread x4-x8), not to mention MasterCard's rates. This is a very good reason to use an USD card.
    – tomasz
    Apr 23, 2015 at 23:19

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