Key Takeaway: A foreign transaction fee is an extra charge — typically 1% to 3% of the purchase — that some credit card issuers add when a transaction is made in a foreign currency or routed through a foreign bank. The most reliable way to avoid it is a card that doesn’t charge one.
A foreign transaction fee is an extra charge — typically 1% to 3% — that some card issuers add when a purchase is made in a foreign currency or routed through a foreign bank. Foreign transaction fees might not seem like a big deal until you come home from traveling and see a bundle of charges you’re not expecting. They usually show up on your statement after travel — sometimes after an online purchase you didn’t expect.
- How do foreign transaction fees work?
- How much do foreign transaction fees cost?
- When will I be charged a foreign transaction fee?
- Which credit cards don’t charge foreign transaction fees?
- What other charges should I watch for abroad?
- How can you avoid foreign transaction fees?
- FAQs about foreign transaction fees
How do foreign transaction fees work?
When you make a purchase in a foreign currency, your card issuer converts it to U.S. dollars and then adds a fee — usually 1% to 3% of the converted amount. So if your dinner in Paris costs $100 and your card’s fee is 3%, you’ll see an extra $3 on your statement.
Your issuer often converts the charge to dollars at that day’s rate, applies the fee if your card has one, and posts both to your statement.
How much do foreign transaction fees cost?
If your card charges a foreign transaction fee, it typically ranges from 1% to 3%. Your exact rate is listed in your card’s terms and conditions. It might seem insignificant, but if you’re traveling internationally with a card that charges a foreign transaction fee, it can add up. Here are a few examples.
3% foreign transaction fee
- Hotel: $2,500 X 3% = $75
- Food: $1,000 X 3% = $30
- Souvenirs: $500 X 3% = $15
1% foreign transaction fee
- Hotel: $2,500 X 1% = $25
- Food: $1,000 X 1% = $10
- Souvenirs: $500 X 1% = $5
When will I be charged a foreign transaction fee?
You’ll be charged a foreign transaction fee at the time of the purchase by your credit card issuer, but not all credit cards charge a foreign transaction fee. To find out if your card does, check the “fees” section of the terms and conditions for your card.
If your card charges the fee, you’ll see a little extra when you swipe outside the U.S. You’ll sometimes even pay the fee when making purchases from within the U.S. if you make a purchase from an online retailer from overseas or when the purchase is routed through a bank that’s based outside of the U.S.
Which credit cards don’t charge foreign transaction fees?
Capital One doesn’t charge foreign transaction fees on any of its credit cards, and many travel cards skip the fee too. Beyond that, many travel rewards cards don’t charge foreign transaction fees, often charging an annual fee in exchange for perks like lounge access or travel credits.
Compare options for credit cards with no foreign transaction fees.
What other charges should I watch for abroad?
Foreign transaction fees aren’t the only fee you’ll need to watch out for while traveling abroad. Other costs to be aware of include exchange rates, dynamic currency conversions, ATM fees and cash advance fees.
- Exchange rate markups: The exchange rate you get won’t be the same everywhere you go. You can check the going rate with your card network’s own converter — Visa and Mastercard both publish theirs.
- Currency conversion: Merchants and ATMs may offer to charge you in U.S. dollars at their own exchange rate.
- ATM fees: When you withdraw money from an ATM, you’ll incur ATM fees from both the ATM and your bank. It can be a percentage of the amount withdrawn, similar to a foreign transaction fee. It can also be a flat fee, usually between $1 and $5. Some banks and brokerages reimburse out-of-network ATM fees — though reimbursement may not extend to international ATMs.
- Cash advance fees: Getting cash from your credit card can be expensive whether you’re traveling abroad or not. Add in foreign transaction fees and ATM fees, and it becomes a big cost to take cash from your credit card.
How can you avoid foreign transaction fees?
Get a card with no foreign transaction fees
The only sure way to avoid foreign transaction fees is to carry a card that doesn’t charge them. If you’re looking for a new card, start by comparing travel credit cards to find options that likely don’t charge foreign transaction fees. But if avoiding this fee is your primary concern, check the any card’s terms and conditions to be certain before applying.
Avoid a worse exchange rate
When a merchant abroad asks whether you’d like to pay in U.S. dollars or the local currency, choose the local currency. This won’t get you out of a foreign transaction fee, but it avoids dynamic currency conversion.
If you choose to pay in the local currency, though, your credit card network will handle the conversion, and often, your card network’s rate is usually closer to the market rate than the merchant’s.
Pay with cash
Paying with cash doesn’t come with foreign transaction fees. Before your trip, estimate how much cash you’ll need. Convert the money at your home bank and bring it with you. You can also bring your debit card for emergency cash withdrawals — just pick one that doesn’t charge a foreign transaction fee and has a wide ATM network.
What’s next?
Before an international trip, check whether your card charges foreign transaction fees. Purchases from home can trigger them if the retailer or its bank is outside the U.S. If your card does charge the fee, compare no-foreign-fee options before you go.
FAQs about foreign transaction fees
Many banks do charge foreign transaction fees on debit card purchases — often 1% to 3% of the transaction. Check your account’s terms and conditions or call your bank to see what your debit card charges.
Online purchases from foreign retailers and charges routed through non-U.S. banks can trigger the fee without a trip abroad.
No. A foreign transaction fee is charged by your bank or card issuer on purchases made abroad or in a foreign currency. A currency conversion fee comes from the card network, or gets built into the exchange rate when a merchant offers to charge you in U.S. dollars. Either way, the cardholder pays it.