If you use your credit card outside the U.S., a “foreign transaction fee,” also known as currency conversion fee may apply. This charge comes from your card-issuing bank and payment network for processing an international transaction.
These fees can add up, but many card issuers have begun eliminating them entirely. Explore some of the top cards without foreign transaction fees here.
What are they?
Credit card foreign transaction fees are charges that appear on your statement for transactions conducted outside the US, such as those completed using Visa or MasterCard cards. They act as surcharges on purchases that can range anywhere from 1-3% of purchase amounts; these fees are assessed by card networks like Visa and MasterCard and their issuers who each levy their own fee structures.
Most major card issuers offer cards without foreign transaction fees, with certain products including this benefit only requiring excellent or very good credit to qualify.
An international credit card can come in handy when travelling or shopping online from foreign merchants. They’re also great everyday spending cards as they allow you to avoid exchange rate markup fees; and since any such fees appear separately on your statement it makes them easy to identify.
What are the fees?
Credit card foreign transaction fees are assessed on every international purchase made with your card, typically by Visa and Mastercard networks (the network fee being set, while issuer fees vary. Some issuers charge on top of this network fee while others absorb it into their overall card rate).
Dynamic Currency Conversion (DCC) fees may also be charged by both card networks and card issuers – usually as a markup on actual exchange rates – which vary in amount depending on which currency your transaction occurs in. Your card’s Rates and Fees document or online card account always lists these transactions; NerdWallet estimates the average foreign transaction fee as approximately 3% of your purchase amount. Some card issuers even do away with them altogether!
How do I avoid them?
Avoid foreign transaction fees on your travels by carrying cash with you. Foreign transaction fees typically consist of two separate charges on your credit card statement: an issuing bank fee and network charges (currency conversion fees). They can quickly add up when traveling overseas or shopping online from companies located outside the US.
Both fees typically range between 3% and 4%; to determine whether your credit card has them, review its “Pricing and Terms” or “Rates and Fees” section in its cardholder agreement. Some cards don’t charge foreign transaction fees at all – these cards could be ideal for travelers or people shopping frequently with foreign merchants online.
Business owners using their credit cards for expenses can also be subject to fees, so it is wise to compare options available and find one with no hidden or uncleared charges or rates. Under the Credit CARD Act of 2009, issuers cannot conceal these costs from consumers, so all charges should be clearly communicated and disclosed.
Which cards have no foreign transaction fees?
Travel cards without foreign transaction fees are an economical solution to making overseas trips more manageable. Although such cards require a good to excellent credit score, they can help reduce currency conversion fees by charging everything to your card directly in local currency rather than through merchant’s dynamic rate conversion service.
These fees can add up quickly if you travel frequently or shop internationally, but there are credit cards without these fees that offer enhanced rewards rates and extra benefits, making their annual fee worth paying.
To find a credit card without foreign transaction fees, review its terms and conditions (also referred to as “Pricing and Terms” or “Rates and Fees”). Typically you’ll find any applicable foreign transaction fees listed under Fees section of your card’s Terms & Conditions document. Alternatively, business cards without such fees could help offset costs associated with international spending for your business.
