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Many international travelers encounter foreign transaction fees while making purchases or withdrawing cash from an ATM in a foreign country. The easiest way to avoid a foreign transaction fee is to use a debit or credit card that waives foreign transaction fees while traveling abroad. Luckily, there are plenty of credit and debit card options that offer this perk for those crossing borders.
What Is a Foreign Transaction Fee?
A foreign transaction fee is a fee charged by a credit card issuer or bank for every transaction made in a country outside of the U.S. Fees vary depending on the credit card or bank’s terms and conditions, but usually fall between 1% and 5% of the purchase amount. Always check a card’s terms before assuming anything—especially when it comes to fees.
Payment processing networks like Visa, Discover, Mastercard and American Express may also charge international fees. Card issuers can opt to exclude this fee from card terms but if not, the network’s fee will be tacked on to any fee charged by the issuer.
Foreign transaction fees typically show up as separate charges on your billing statement.
How Much Are Foreign Transaction Fees?
Foreign transaction fee amounts can vary, and some cards do not charge a fee. Others may charge fees ranging from 1% to 3%. Any card charging more than 3% should be viewed with skepticism, as fees this high are rare.
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Get 70,000 bonus miles plus Alaska's Famous Companion Fare™ ($99 fare plus taxes and fees from $23) with this offer. To qualify, make $3,000 or more in purchases within the first 90 days of opening your account.
Credit Score ranges are based on FICO® credit scoring. This is just one scoring method and a credit card issuer may use another method when considering your application. These are provided as guidelines only and approval is not guaranteed.
How To Calculate Foreign Transaction Fees
A foreign transaction fee is typically calculated by adding the predetermined fee percentage charged by your credit card issuer to a purchase made with a foreign merchant to the cost of the original purchase. For example, if you’re making a purchase in another country that is the equivalent of $100 and you pay for it with a card that has a 3% foreign transaction fee, your total cost will be $103. Note that foreign transaction fees are charged in addition to any currency conversion fees charged and are not the same thing.
Types of Transactions Subject to Foreign Transaction Fees
Any purchase made at a store, restaurant or other vendor outside the U.S. may be subject to a foreign transaction fee if your credit card has one. Many establishments frequented by tourists will offer the option of paying in your home currency. Be wary of this option, as the currency conversion rates are almost always worse than the rates you would get if you simply processed the charge in local currency and you will still be charged a foreign transaction fee on top of that.
A good rule of thumb when traveling is to select the local currency during payment to avoid conversion fees and to use a card that doesn’t charge foreign transaction fees.
Cash withdrawals from international ATMs are also subject to fees. In addition to ATM transaction fees, conversion fees may also be tacked on by the ATM’s operator. These currency conversion fees are most likely to be encountered if a cardholder withdraws U.S. dollars from an international ATM.
Online purchases on an international shopping website may also incur foreign transaction fees, especially if the payment processor is an international bank or institution. This includes buying airline tickets from an international airline, even if the transaction is made in U.S. dollars.
Popular Credit Cards With No Foreign Transaction Fees
Check out our list of the best travel credit cards for more options.
How To Avoid Foreign Transaction Fees
Several options exist to help you avoid foreign transaction fees when you travel abroad. Many banks offer credit cards without foreign transaction fees and a number of institutions offer checking accounts that do not charge foreign transaction fees for debit card cash withdrawals abroad.
New debit or credit card applications can sometimes take up to a week to be approved. Waiting for a new card to be delivered in the mail can also take time, up to two weeks, so you should consider these options well before your next big trip.
Apply for a Credit Card With No Foreign Transaction Fees
Plenty of credit cards offer cardholders the ability to swipe without incurring a foreign transaction fee. These cards present the easiest and safest strategy when making purchases abroad.
Credit cards without foreign transaction fees are useful while visiting other countries and at home while shopping online from an international website. Many cards even offer rewards that can be used for future travel or help defray the cost of everyday purchases.
Perhaps the biggest advantage to using a credit card with no foreign transaction fees during your travels is that, even if credit card information is copied or stolen, it’s relatively easy to report fraud and quickly get back stolen funds from a credit card issuer.
One of the most popular travel rewards cards is the Chase Sapphire Preferred® Card. The Sapphire Preferred doesn’t charge foreign transaction fees and earns 5 points per dollar on travel purchased through Chase Travel℠, 3 points per dollar on dining, select streaming services, and online grocery purchases (excluding Walmart, Target and wholesale clubs), 2 points per dollar on all other travel purchases and 1 point per dollar on other purchases. It has an annual fee of $95. The rewards earned on this card can be redeemed for flights, dining, hotels and more.
Get a Checking Account or Debit Card With No Foreign Transaction Fees
Pairing a debit card without international fees with a similar credit card makes a great combo for a frequent traveler. Even on its own, a debit card that doesn’t charge foreign transaction fees is useful for making everyday purchases and withdrawing money from ATMs. Travelers should always avoid using a credit card to withdraw cash from an ATM due to high cash advance fees.
A popular option for travelers is the Schwab Bank Investor Checking account. Schwab debit cardholders have zero foreign transaction fees and receive ATM fee rebates at the end of each month.
Although using a debit card can be convenient, they offer less protection against fraud compared to credit cards. If debit card information is stolen, it can take much longer to receive stolen funds from the issuing bank and some account holders may see their luck run out entirely. For those traveling on a budget or who have limited available capital, this can pose significant dangers while abroad. Always report fraud right away and follow any steps the bank may require to receive funds back as quickly as possible.
Don’t Use International ATMs Without Checking Fees First
Regardless of what type of credit or debit card is in hand, travelers should verify fees before using an international ATM. Fees to consider include the international ATM’s fee, currency conversion fees and the home bank’s fees. These fees can be avoided by choosing a bank account that doesn’t charge fees and reimburses out-of-network ATM fees and by always withdrawing local currency from ATMs. Account holders can also ask their home bank if there are partner branches or in-network ATMs in the destination country or countries.
Travelers who don’t have an account that reimburses fees may want to consider making fewer trips to the ATM and pulling out more cash each time to minimize fees.
Exchange Cash Before Leaving The U.S.
One way to avoid ATM or transaction fees is to pay for a trip in cash. Travelers can exchange U.S. dollars for most major currencies at a bank, credit union or currency exchange store before a big trip. This may be a good idea if it’s easy to budget how much will be spent on dining or souvenir purchases. Banks and credit unions typically have the lowest exchange rates or fees compared to exchanging money at an airport upon arrival. We recommend exchanging currencies as far away from an airport as is feasible—rates are generally worse the closer you get to a major transportation hub.
Keep in mind the risk involved with carrying a large amount of cash while traveling. There’s a greater chance of losing the money or having it stolen. Be extremely careful when choosing this option and be sure to have a backup plan, such as a second credit card, so that you don’t find yourself with no way to buy food or transportation. When cards are stolen, fraud protection benefits may limit a cardholder’s responsibility to $0, but when cash is stolen, there’s often no recourse.
Bottom Line
Foreign transaction fees can be avoided safely with the right credit or debit card in your wallet. Apply for a credit card or checking account that comes with zero transaction fees or ATM rebates well before your trip to make sure there’s sufficient time to receive a credit card or account approval and obtain a new credit or debit card by mail.
If applying for a no-fee card is not an option, consider exchanging enough cash for the trip at a bank or credit union before leaving the U.S. Paying for things in local currency means no transaction fees tacked onto bills. This strategy can be risky, though, so be sure to consider how to best protect yourself and your cash while traveling abroad.
As long as there’s a plan in place well ahead of time, any traveler can avoid foreign transaction fees.
Find The Best No Foreign Transaction Fee Credit Cards Of April 2024
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Frequently Asked Questions (FAQs)
How can I get a foreign transaction fee waived?
There is no guarantee you will see a foreign transaction fee waived. You can attempt to get it waived by contacting your credit card’s customer service department and requesting it, but there are no guarantees.
Which banks do not charge foreign transaction fees?
Capital One doesn’t charge foreign transaction fees for any of its U.S.-issued credit card products. Most other banks offer at least a handful of credit card products that don’t charge foreign transaction fees.
How do I find out if my credit card charges foreign transaction fees?
Some credit cards include no foreign transaction fees as a part of the cardmember perks and benefits packages. Other credit cards waive foreign transaction fees during the first year as part of a welcome offer.
It is important to know your card’s features. If you do not, you can look it up online, review your card agreement or contact your bank’s customer service department.
When are foreign transaction fees charged?
A credit card foreign transaction fee is charged when you use your credit card while abroad or when you make a purchase online in a foreign currency.
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