Guide to foreign transaction fees
Flights, hotels, food, and sightseeing can add up very quickly when traveling, especially if you are planning an international getaway. Foreign transaction fees are an often overlooked travel expense. If your credit card charges these fees (some credit cards don’t have overseas transaction fees), you’ll encounter them any time you make purchases with your credit card outside of the United States.
These fees can range from 1% to 4% of every credit card transaction you make and can add up quickly if you’re not careful with your international spending.
Let’s take a closer look at what overseas transaction fees are, how to avoid them, and which credit cards can make shopping overseas easier without spending too much.
What are the foreign transaction fees?
Foreign Transaction Fees (FTFs) are additional fees that credit card holders pay for transactions processed outside of the United States. These could be purchases you make while traveling overseas or just an online purchase from a merchant based overseas.
Foreign transaction fees consist of two charges. One is from the card issuer eg Chase, Bank of America or Citi, and the other from the network ie Visa, Mastercard, Discover or American Express.
How much are foreign transaction fees?
Each credit card will have different terms that will dictate how much the foreign transaction fee will cost the cardholder, so it’s important to review your credit card terms and conditions to know exactly how much you’ll pay.
You can usually find this information in the “Rates and conditions” or “Rates and charges” section. You should see the exact percentages charged for these fees in the “Fees” section.
Foreign transaction fees typically range from 1% to 4% and tend to average around 3% of each transaction. Paying around $ 3 for every $ 100 you spend may not seem that expensive, but those fees can add up if you make a lot of purchases with your credit card while on an overseas getaway.
Foreign Credit Card Transaction Fee Table
Here’s a breakdown of overseas transaction fees for major issuers:
|Bank of America||2%||1%||3%|
|A capital letter||–||–||–|
You should always use a credit card when traveling
While it is important to keep overseas transaction fees in mind, don’t be afraid to use a credit card when traveling overseas, as using a card presents many advantages.
You can avoid paying foreign fees if you take the right credit card before you travel. Be sure to compare the best travel credit cards to see which option could offer the most benefits for your needs, including no overseas transaction fees. The best travel cards and rewards cards allow you to earn cash back, airline miles, hotel points or flexible rewards for every dollar spent.
Besides having the potential to earn rewards, using a credit card abroad is a great way to get zero fraud liability coverage. If your credit card is lost or stolen abroad, you will not be liable for a single penny of fraudulent purchases.
How to Avoid Foreign Transaction Fees
Whatever your travel budget, try to avoid overseas transaction fees for one simple reason: they increase the cost of your purchase without adding value. Fortunately, you can eliminate or reduce the fees you’ll pay with a little planning. Here are some suggestions to get you started:
Exchange your money before you go
If you decide to go with cash, exchanging your US dollars for another currency before leaving the US may be more convenient and less expensive than doing so abroad and may cost less than the fees. transaction abroad.
When exchanging your money abroad, you might run into difficulties, especially if you are not very familiar with the country. You might experience long wait times, difficulty finding a currency exchange office nearby, or face exorbitant fees when changing currencies.
Open a bank account without transaction fees abroad
Opening a bank account with no transaction fees abroad can be useful when using your debit card or collecting money from ATMs abroad. When you withdraw money abroad, you may be charged international transaction fees and off-network ATM fees.
Another option would be to use a bank account that reimburses fees for using international ATMs, such as Schwab Bank’s High Yield Investor Checking Account. The only downside is that you have to connect your account to a Schwab One brokerage account. As an added bonus, Schwab also does not charge transaction fees abroad.
Get a credit card that doesn’t charge overseas transaction fees
Applying for a card that does not charge an overseas transaction fee before your overseas trip or purchase is an ideal option to avoid additional fees while traveling. It should be noted, however, that just because an issuer charges an overseas transaction fee does not mean your specific credit card will charge you one. There are many credit cards that do not have overseas transaction fees, even though their issuers do.
Here are some of the best credit cards with no foreign transaction fees:
Best Credit Cards with No Foreign Transaction Fees
Chase Sapphire Reserve®: Ideal for additional travel benefits
- Reward Rate: 3X points on qualifying travel and restaurant purchases (after earning your $ 300 travel credit); 10X total points on Lyft purchases (until March 31, 2022); 1X points on all other purchases
- Welcome Offer: 60,000 points after spending $ 4,000 on purchases in the first three months
- Annual membership fee: $ 550
- APR: 16.99% to 23.99% variable
The Chase Sapphire Reserve is one of the most popular travel credit cards. With bonus points when opening the card, a fee credit for Global Entry or TSA PreCheck, and an annual travel credit of $ 300, this card offers a lot to travelers.
One of the biggest draws is the Chase Ultimate Rewards portal, where cardholders can redeem higher value points for travel-related expenses 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: Ideal for simple cash back
- Reward rate: 1.5% unlimited cash back on all purchases
- Welcome offer: $ 200 cash bonus after spending $ 500 on purchases in the first three months
- Annual membership fee: $ 0
- APR: 15.49% to 25.49% variable
The Capital One Quicksilver Cash Rewards credit card is a great option for travel and cash back. With it, you can earn 1.5% unlimited cash back, even on international purchases. Plus, there are no overseas transaction fees and no annual fees. This makes the card inexpensive to own and use. This card also uses the Visa payment network, which means it is accepted in over 200 countries and territories.
Discover it® Cash Back: the best for customer service
- Reward rate: 5% cash back after activation on rotating categories each quarter (up to $ 1,500 in purchases, then 1%), 1% for all other purchases
- Welcome Offer: Automatic Cashback Match for the first year
- Annual membership fee: $ 0
- APR: 11.99% to 22.99% variable
The Discover it Cash Back is another option for international travel. With no annual fee, 5% cash back on certain expenses, and no overseas transaction fees, the potential to get a lot of card value 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 if you will be able to use your Discover card wherever you go.
Discover Bank is known to provide excellent customer service, so Discover cardholders will benefit from this feature. For the right person, that card might be worth taking overseas, where customer service could be an important resource.
Capital One Venture Rewards Credit Card: Best for Flexible Travel Rewards
- Reward 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 after account opening, or still earn 50,000 miles if you spend $ 3,000 on purchases in the first three months
- Annual membership fee: $ 95
- APR: 17.24% to 24.49% (variable)
The Capital One Venture Rewards credit card isn’t necessarily a premium travel card, but the 2X rewards on all purchases are still a steal for international travelers. Combined with a low annual fee and no overseas transaction fees, it makes a solid entry-level card for travelers.
Flexibility comes into play 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 statement credit for recent qualifying travel purchases (within the last 90 days), or transferring miles to travel programs. partner airlines and hotels.
American Express® Gold Card: Ideal for international meals
- Reward Rate: Earn 4X Membership Rewards® Points on restaurants, including take out and Uber Eats delivery and purchases and in U.S. supermarkets (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 via amextravel.com, plus 1X points on all other purchases
- Welcome Offer: 60,000 points after spending $ 4,000 on purchases in the first six months
- Annual membership fee: $ 250
- APR (for Pay Over Time): variable from 15.99% to 22.99%
The American Express Gold Card could be the perfect travel card for international foodies. Sure, having no overseas transaction fees is a good start, but there is a lot of value when it comes to redeeming points with a diverse list of travel partners. In some cases, your points could be value up to 2 cents per point or more. If you like to dine out while traveling abroad, this card gives you a great opportunity to earn 4X points.
The bottom line
Foreign transaction fees don’t have to be part of international credit card spending. There are many credit cards that don’t charge an overseas transaction fee, but still offer perks and perks for frequent travelers, so you can start saving on your travel expenses.