International Transactions

As discussed, you're heading overseas and you want to know how foreign currency transactions work...
There are three options
1. Cash
2. Traveler checks
3. Credit cards
we will discuss options 1 and 3
With regards to cash, you can exchange US Dollars (USD) for the currency of your choice at many banks here or in the country of destination. The banks will exchange the currencies for you.
However they will do the exchange, several points off the exchange rate, meaning that you won't get full value for your money, and besides carrying around a whole lot of cash is never a good idea.
Which leads us to the credit card option:
When you initiate a foreign transaction on your credit card, the credit card companies pay the merchant in the local currency and they charge you in your home currency. They use the exact exchange rate.
Now, Visa and Mastercard charges 1% of the transaction, in order to cover any loss. For some reason most credit card issuers tack on an extra 2% for a total of 3% .
However there are two options 1. CapitalOne . CapitalOne exchanges at the rate and they also swallow the Visa/MC 1% fee! That is probably the best option, unless you have the .....
Amex Starwood Card. American Express charges a 2% flat fee on all foreign transactions ( 1% less then most issuers) . Now if your rewards are worth more than 2% you're in the clear!
Starwood points are worth 3 - 3.5 cents a point so you made back your 2% fee plus 1-1.5% back!!
However if you can get the CapitalOne card which gives 1.25% back on all purchases, that would be the true winner.