All credit cards and regular bank cards in Norway have currency spreads. But what does it really mean and how much do you have to pay? We try to answer you in this article. At the same time, we give you tips on how to avoid this hidden fee so you can save money when traveling or shopping abroad.
Currency exchange rate card
Not everyone may know this, but currency surcharges are actually found on all credit cards. This applies to both credit cards and debit cards, and it applies to all Norwegian banks. Therefore, you cannot avoid getting a card with this fee when you need a Norwegian card.
Avoid the hidden fees
When you shop abroad and pay with a Norwegian card, you are charged a currency surcharge. And this is true regardless of whether you shop online and order goods home from abroad, or whether you shop in another country on a trip. The fee is added right away, you trade in a currency other than Norwegian kroner. For the vast majority of Norwegian banks, this amounts to 1.75% of the amount. And unfortunately, you cannot avoid it by using a different card, because as mentioned above, currency spreads are found on all Norwegian bank cards and debit cards.
One solution is to switch to the local currency before you trade. Of course, this is only an option if you are in the country in question. Often you will save money on choosing this solution rather than paying with your Norwegian card and including foreign exchange premiums. A good advice is always to calculate the amount for both options.
To do this, calculate the price with the fee: Price in local currency x exchange rate x (1 + currency surcharge)
Currency spreads will most often be 0.0175. It is always wise to calculate the price so that you can make sure that the point of sale draws the right amount. Most often it will pay to pay in local currency, but for larger amounts you should always figure out the difference to be sure. By paying in local rates, you also insure against poor exchange rates at the point of sale.
What is Currency Exchange Rate?
Now you know how to avoid foreign exchange premiums. But what is it, and why is it? In short, there is a fee the bank charges when you trade in a currency other than Norwegian kroner. You pay for the bank to make a conversion from the currency you have in your account to the one that the seller requires. Most Norwegian credit cards have no other fees for goods purchases abroad, but the foreign exchange premium comes in addition to any other fees.
The vast majority of banks have a flat fee of 1.75%. That is 1.75% of the amount you have to pay. Few banks have a higher currency spread of, for example, 1.85% or 2%.
Foreign exchange premiums are therefore a ‘hidden’ fee, which most people forget when shopping abroad. Most often it pays to exchange money in advance and pay in local currency, because this is cheaper than the price including surcharge. If this is a larger amount, then it is worth spending time figuring out the price difference between the two options. Please note that there may also be fees for, for example, withdrawing money from an ATM abroad, so this must be included in the calculation.