Using your credit card while traveling overseas may get you the best exchange rate. But travelers must watch which credit card they use while traveling. Some credit cards end up charging unaware travelers up to 7% for transactions overseas.

The difference between cards is dramatic. While a credit union associated Visa or MasterCard card might only charge the minimum 1% bank card fee, other major credit card issuers add a 2% foreign transaction fee for normal purchases. If the card is used to get cash while traveling, fees up to 4% might be added.

I have often told friends that the best exchange rates while traveling overseas are those obtained when using a credit card. But the credit card world has changed dramatically over the past few years.

The foreign transaction fee seems benign; however it eliminates what used to be a wonderful money-saving perk of using credit cards. Now, with a 3% fee added to purchases there isn’t much of a transaction saving even when changing money from local money-changers. Using a credit card is convenient, but, today, depending on the credit card a traveler uses, that convenience comes at a price. If money is withdrawn from an ATM, the costs can rise dramatically.

Where once getting cash overseas using a credit card always provided a better rate than exchanging travelers checks or cash at a bank, the 2% transaction fee plus 1% exchange fee plus up to 4% cash advance fee, makes travelers checks and cash a good deal once again.

Take close look at the fine print in your credit card agreement before deciding which card you might want to use overseas. All Visa or MasterCard foreign charges will incur a 1% foreign exchange fee. The additional charges create the major differences between various credit card issuers.

With an exchange rate of 1.15 Euros/$, a traveler taking $1,000 out of an ATM machine in Europe will receive anywhere between EUR860.87 and EUR808.87 depending on which credit card is used. That is a major difference.

When cashing a $1,000 travelers check at a bank in Spain last month, I received EUR849 and some change. That rate would have beaten every credit card except my credit union card and the USAA Federal Savings Bank MasterCard.

According to my calculations, charging a string of pearls that costs 800Euros will result in a bill on a credit card of $929.20 if charged to the USAA MasterCard or my credit union Visa card, $938.40 if charged to American Express or Diners Club, and as much as $947.60 if charged to Citibank or Chase MasterCard or USBank Visa. That is a difference of more than $18. Added up throughout a vacation, those added charges can reach hundreds of dollars.

Here are some examples that I dug out of my file cabinet. This list is by no means exhaustive, nor is it complete in any way. These figures may not be exact; however, they will give you an idea of how much the foreign transaction and cash advance charges vary.

* The Navy Federal Credit Union Visa card has no foreign transaction charge. For cash advance the charge is $1.75 + .33%.

* USAA Federal Saving Bank has no foreign transaction charge or a cash advance fee.

* American Express charges a flat 2% for foreign transactions.

* Diners Club charges a flat 2% for foreign transactions and a 4% fee for cash advances.

* USBank Visa, Citibank MasterCard and Chase MasterCard all charge a 2% foreign transaction fee.

Cash advance fees seem to top out at 4%. These fees are charged in addition to the 2% foreign transaction fees.

The clear message here — check your credit card fees before you go overseas. Then use the credit card that charges the lowest foreign transaction fees and has the lowest cash advance fees. That way, using your credit card can be a better deal than taking cash or travelers checks.