October 27, 2021

Model Desac

It’s Time to Fly

A Guide To Foreign Transaction Fees

7 min read

Flights, hotels, food and tours can add up really fast when you’re traveling, especially if you’re planning an international getaway. One travel expense that is often overlooked is foreign transaction fees. If your credit card charges these fees (some credit cards have no foreign transaction fees) you’ll run into them whenever you make purchases using your credit card outside of the United States.

These fees can run anywhere from 1 percent to 4 percent of each credit card transaction you make and can pile up quickly if you’re not mindful of your international spending.

Let’s take a closer look at what foreign transaction fees are, how to avoid them and which credit cards can make it easier to make purchases overseas without overspending.

What are foreign transaction fees?

A foreign transaction fee (FTF) is a surcharge credit cardholders pay for transactions processed outside of the United States. This can be purchases you make while traveling abroad or simply making an online purchase from a merchant based overseas.

Foreign transaction fees are composed of two charges. One comes from the card issuer—for example, Chase, Bank of America or Citi—and the other is from the network—that is, Visa, Mastercard, Discover or American Express.

How much do foreign transaction fees cost?

Every credit card will have varying terms that dictate how much a foreign transaction fee will cost the cardholder, so it’s important to review your credit card’s terms and conditions to know exactly how much you’ll be paying.

You can usually find this information in the “Pricing and Terms” or “Rates and Fees” section. You should see the exact percentages charged for these fees under the “Fees” section.

Foreign transaction fees generally range from 1 percent to 4 percent and tend to average around 3 percent of each transaction. Paying around $3 per $100 you spend may not sound that expensive, but these fees can add up if you’re making a lot of purchases with your credit card on a foreign getaway.

Credit card foreign transaction fee chart

Here’s a breakdown of foreign transaction fees for major issuers:

American Express 2.7% 2.7%
Bank of America 2% 1% 3%
Capital One
Chase 2% 1% 3%
Citi 2% 1% 3%
Discover
Wells Fargo 3% 1% 4%

You should still use a credit card when you travel

While it’s important to keep foreign transaction fees in mind, don’t be scared off from using a credit card while traveling internationally, as there are a lot of benefits you can gain from using one.

You can avoid paying foreign fees if you pick up the right credit card before you travel. Make sure to compare the best travel credit cards to see which option might offer the most perks for your needs, including no foreign transaction fees. The best travel cards and rewards cards let you earn cash-back, airline miles, hotel points or flexible rewards for each dollar you spend.

Besides having the potential to earn rewards, using a credit card overseas is a great way to score zero fraud liability coverage. If your credit card is lost or stolen abroad, you won’t be on the hook for a single cent of fraudulent purchases.

How to avoid foreign transaction fees

No matter what your travel budget is, try to avoid foreign transaction fees for a simple reason—they increase the cost of your purchase without adding any value. Fortunately, you can eliminate or reduce the fees you’ll pay with a little planning. Here are a few suggestions to get you started:

Exchange your money before leaving

If you decide to go the cash route, exchanging your U.S. dollars for another currency before leaving the U.S. can be more convenient and less costly than doing it abroad and may cost less than foreign transaction fees.

When exchanging your money overseas, you could run into challenges, especially if you don’t know the country very well. You could experience long wait times, difficulty finding a nearby currency exchange or face exorbitant fees when changing currencies.

Open a bank account with no foreign transaction fees

Opening a bank account that doesn’t have foreign transaction fees can be useful when you’re using your debit card or getting cash from ATMs overseas. When you withdraw cash abroad, you could be charged both international transaction fees and out-of-network ATM fees.

Another option would be to use a bank account that reimburses the fees for international ATM usage, such as Schwab Bank’s High Yield Investor Checking Account. The only caveat is that you have to connect your account to a Schwab One brokerage account. As a bonus, Schwab also doesn’t charge foreign transaction fees.

Get a credit card that doesn’t charge foreign transaction fees

Applying for a card that doesn’t charge foreign transaction fees before your trip or overseas purchase is an ideal option for avoiding additional fees while traveling. It’s worth noting, however, that just because an issuer notes a foreign transaction fee it doesn’t mean your specific credit card will charge you one. There are plenty of credit cards that don’t have foreign transaction fees, even if their issuers have them.

Here are some of the best credit cards with no foreign transaction fees:

Best credit cards with no foreign transaction fees

Chase Sapphire Reserve®: Best for extra travel perks

  • Rewards rate: 3X points on eligible travel and restaurant purchases (after earning your $300 travel credit); 10X total points on Lyft purchases (through March 31, 2022); 1X points on all other purchases
  • Welcome offer: 60,000 points after spending $4,000 on purchases within the first three months
  • Annual fee: $550
  • APR: 16.99 percent to 23.99 percent variable

The Chase Sapphire Reserve is one of the most popular travel credit cards around. With bonus points upon opening the card, a fee credit for Global Entry or TSA PreCheck and an annual $300 travel credit, this card offers a lot for travelers.

One of the biggest appeals is the Chase Ultimate Rewards portal, where cardholders can redeem points at a higher value for travel-related spending with travel partners. The annual fee is higher than many travel cards but it could be worth it if you travel frequently.

Capital One Quicksilver Cash Rewards Credit Card: Best for simple cash back

  • Rewards rate: Unlimited 1.5 percent cash back on all purchases
  • Welcome offer: $200 cash bonus after spending $500 on purchases within the first three months
  • Annual fee: $0
  • APR: 15.49 percent to 25.49 percent variable

The Capital One Quicksilver Cash Rewards Credit Card is a great option for both travel and cash back. With it, you can earn 1.5 percent unlimited cash back, even on international purchases. Plus, there are no foreign transaction fees or annual fees. This makes the card inexpensive to own and use. This card also uses the Visa payment network, which means that it’s accepted in more than 200 countries and territories.

Discover it® Cash Back: Best for customer service

  • Rewards rate: 5 percent cash back after activation on rotating categories each quarter (up to $1,500 in purchases, then 1 percent), 1 percent for all other purchases
  • Welcome offer: Automatic Cashback Match for the first year
  • Annual fee: $0
  • APR: 11.99 percent to 22.99 percent variable

The Discover it Cash Back is another option for international travel. With no annual fee, 5 percent cash back on certain spending and no foreign transaction fees, the potential to get a lot of value from the card is vast.

The Discover card, however, is not as widely accepted as Visa and Mastercard, so it’s important to do some research ahead of time to see whether you’ll be able to use your Discover card where you’re going.

Discover Bank is known to provide excellent customer service, so Discover cardholders will benefit from this feature. For the right person, this card could be well worth taking abroad, where customer service might be an important resource.

Capital One Venture Rewards Credit Card: Best for flexible travel rewards

  • Rewards rate: 5X miles on hotels and rental cars booked through Capital One Travel; 2X miles on all other purchases
  • Welcome offer: Earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3,000 on purchases in the first three months
  • Annual fee: $95
  • APR: 17.24 percent to 24.49 percent (variable)

The Capital One Venture Rewards Credit Card is not necessarily a premium travel card, but the 2X rewards on all purchases are still a deal for international travelers. Paired with a low annual fee and no foreign transaction fees, it has the makings of a solid entry-level card for travelers.

The flexibility comes in when you earn and redeem points. You can earn unlimited 2X points on all your spending. Then, you can redeem points by booking travel through the Capital One rewards portal, receiving a statement credit for recent eligible travel purchases (within the last 90 days) or transferring miles to partner airline and hotel programs.

American Express® Gold Card: Best for international dining

  • Rewards rate: Earn 4X Membership Rewards® Points on restaurants, including takeout and delivery and Uber Eats purchases and at U.S. supermarkets (on up to $25,000 in purchases per year, then 1X points), 3X points on flights booked directly with airlines or on amextravel.com and 2X points on rental cars through amextravel.com, plus 1X points on all other purchases
  • Welcome offer: 60,000 points after spending $4,000 in purchases within the first six months
  • Annual fee: $250
  • APR (for Pay Over Time): 15.99 percent to 22.99 percent variable

The American Express Gold Card could be the ideal travel card for international foodies. Of course, having no foreign transaction fees is a great start, but there’s plenty of value when it comes to redeeming points with a diverse list of travel partners. In some cases, your points could be worth up to 2 cents per point or more. If you like to dine out while you travel abroad, this card gives you a great opportunity to earn 4X points.

The bottom line

Foreign transaction fees don’t have to be a part of international credit card spending. There are plenty of credit cards that don’t charge foreign transaction fees but still offer perks and benefits for frequent travelers, so you can start saving on your travel-related spending.

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