Credit Card Foreign Transaction Fees
- July 25, 2018
- Posted by: Dave Rathmanner
- Category: Credit Cards
With travelers checks largely a thing of the past, many international travelers rely on their travel credit cards to make purchases abroad.
Most restaurants, accommodations, and other tourist activities around the world accept credit cards. It’s a hassle-free payment method that doesn’t require a trip to the bank or currency exchange office before your trip.
Why Pay Attention to Foreign Transaction Fees
While credit cards make travel simple, many travelers don’t realize they come with hidden fees called foreign transaction fees, that apply to all charges made outside your home country. It's usually a small percentage, between one to three percent, applied to each transaction made while abroad. Credit cards apply the foreign transaction fee as a cost of doing business between different currencies.
These fees can quickly add up, especially on top of the foreign ATM fees, and when making purchases where the currency exchange is not in your favor. Thankfully, considering credit cards are increasingly the preferred method of payment for tourists and business travelers alike, many travel cards now advertise “No Foreign Transaction Fees.”
How to Look Out for Foreign Transaction Fees
Before your trip, check the fine print of your specific credit card to determine what foreign transaction fees, if any, you can expect to see on your post-vacation credit card bill. Though many of the best credit cards no longer charge them, some do. If you’ve got time, and good credit history, apply to one of the many cards that offer the “no foreign transaction fee” perk.
Typically, foreign transaction fees are a combination of the financial institution’s fee and that of the card issuer, like Visa or American Express. So, these fees vary from card to card. As a starting point, here are the standard foreign transaction fee policies by several major issuers:
Credit Card Foreign Transaction Fees by Issuer
Mastercard Foreign Transaction Fee
When Mastercard does charge a foreign transaction fee, it is typically one percent.
Visa Foreign Transaction Fee
The foreign transaction base charge for most standard Visa cards is one percent of each international purchase or foreign ATM advance. Check the fine print of your specific Visa card to confirm whether your bank adds an additional fee.
American Express Foreign Transaction Fee
American Express currently has nine credit card lines that offers no foreign transaction fees. These include the American Express Gold, Platinum, and some of the travel-focused rewards cards like the Delta line and the Hilton Honors Card.
Can Credit Cards Help You Avoid Foreign Transaction Fees?
Again, many cards are starting to woo international travelers with offers of no foreign transaction fees on top of other perks. Most often, the cards that have no foreign transaction fees are also premium travel rewards cards. They typically link to a hotel, airline or other travel rewards program, and come with an annual fee. Chase Sapphire and Starwood Preferred Amex are examples of the most popular cards with this perk.
Will Your Credit Card Company Reimburse You for International Transaction Fees?
You likely cannot convince your credit card to reimburse you for the foreign transaction fee after the fact, but some banks and credit cards do have built-in offers that reimburse at least some of the international fees. For example, some credit cards reimburse clients' foreign ATM fees automatically, up to a maximum value per month.
Do International Transaction Fees Vary by Country?
Foreign transactions fees, as a percentage of purchase, charged by the credit card do not vary by country. What can vary is the specific international ATM fees. Some countries and some ATMs charge an international transaction fee, usually around $5, on international credit card or debit card withdrawals. Of course, you must agree to accept the fees before the ATM will dispense money. So, if you are using your credit card’s cash advance feature through an ATM feature, be aware of these charges.