Good tips to pay as little as possible for card usage
Payment cards are a convenient and practical way to pay for goods and services while maintaining a clear overview of monthly spending. They also come with certain security features, such as chargeback rights. Here are some tips that Arion Bank cardholders can use to reduce the costs associated with using them.
Always choose a credit card that suits your needs. If you travel frequently and outside of Europe, you will likely want a card with strong insurance coverage, but if you rarely travel, cards with less insurance coverage and a lower annual fee are worth considering. Also make sure you can actually take advantage of the benefits the card offers. Don't pay for benefits you won't use.
If you travel little or not at all but want to shop online, it's smart to get a Netkort (Online Card), which is exclusively for online shopping and has no annual fee.
It can be a good idea to use a credit card for all everyday spending and to put fixed expenses and subscriptions on it. No transaction fees are charged, and the cardholder doesn't need to use their own money immediately, as the bank finances the purchases until the payment due date. In addition, benefits are often linked to card spending and can come in handy.
If you need cash domestically, we recommend using your debit card and Arion Bank ATMs. No fee is charged for such withdrawals.
Abroad, it is generally safer and cheaper to use a card for purchases instead of cash, but if cash is needed, it is better to use the debit card. Note, however, that it is cheaper to withdraw a larger amount in a single transaction rather than making multiple small withdrawals, as a minimum fee is charged for each withdrawal.
Finally, there is the question of whether it is better to shop with a debit card or a credit card abroad. The answer is most often with a credit card. When you use your credit card, you pay a foreign exchange surcharge that is slightly higher than on the debit card, but in return you receive financing until the payment due date and, in many cases, various benefits.
Note that you can sometimes choose to pay in Icelandic króna when shopping abroad. Compare the terms before deciding which currency to use for the transaction, as it is usually more cost-effective to shop in the foreign currency. This can apply both when we are abroad and in online transactions.
About the bank's card fees
The annual fee for debit cards is ISK 950, and they come with no additional benefits. The annual fee for credit cards, however, varies, ranging from ISK 0 to ISK 41,900, depending on the type of card, insurance coverage, and benefits the cards provide.
Travel insurance is included in the annual fee for credit cards and is an important security feature that has proven valuable to cardholders over the years. Various other benefits are also available with the cards, varying in scope depending on the amount of the annual fee.
In general, the largest portion of card usage fees goes toward operating card systems, digital solutions, and membership fees to international card companies. In addition, Arion Bank cardholders have access to 24/7 emergency services, which is a very important security feature, especially when travelling, but also if there is suspicion of card fraud. The bank purchases emergency services from a third party and also has staff on a dedicated fraud watch during evenings and weekends.
Domestic transactions
Each debit card transaction costs ISK 19 for those aged 24 and older, but is free for those aged 23 and younger. No transaction fees are charged on credit cards, even though the bank finances purchases for up to 38 days.
ATM withdrawals are free with a debit card, but if cash is withdrawn from an ATM using a credit card, a fixed fee of ISK 130 plus a 2.2% surcharge applies. Some ATMs also charge an additional fee if the withdrawal is made with a card not issued by them.
International transactions
When shopping in a foreign currency, cardholders pay the bank a foreign exchange surcharge of 2.5% on debit cards and 2.7% on credit cards. The surcharge is slightly higher on credit cards because the bank finances those transactions until the card's payment due date. If the cardholder chooses to pay in Icelandic króna instead of a foreign currency, no surcharge is applied by the bank, but the merchant then sets the surcharge, which is usually higher than the bank's surcharge.
When withdrawing cash from an ATM abroad, a fee is charged, part of which goes to the ATM operator in the country where the cash is withdrawn. As is the case domestically, it is more expensive to withdraw cash with a credit card. It costs 2.75%, with a minimum of ISK 820. A debit card withdrawal, on the other hand, costs 1%, with a minimum of ISK 790.
Below is a table of the bank's main card-related fees:
Card type | Transaction fee | Annual fee | Domestic ATM fee | International ATM fee | Foreign exchange surcharge |
|---|---|---|---|---|---|
Debit card – aged 23 and younger | ISK 0 | ISK 0 | ISK 0 | 1%, minimum ISK 790 | 2.50% |
Debit card – aged 24 and older | ISK 19 | ISK 950 | ISK 0 | 1%, minimum ISK 790 | 2.50% |
Credit card | ISK 0 | ISK 0 – ISK 41,900. Included in the annual fee are travel insurance* and 24/7 emergency services, as well as other benefits that vary by card type. | 2.20% + ISK 130 | 2.75%, minimum ISK 820 | 2.70% |
*Travel insurance is not included with the Online Card or the Purchase Card.
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