Foreign Transaction Fee On Credit Cards - How Does it work (2024)

FAQs

Foreign Transaction Fee On Credit Cards - How Does it work? ›

Key Takeaways

A foreign transaction fee is imposed by a credit card issuer on a transaction that takes place overseas or with a foreign merchant. These fees are typically 1%–3% of the value of the transaction and are paid by U.S. travelers in dollars.

Key Takeaways

A foreign transaction fee is imposed by a credit card issuer on a transaction that takes place overseas or with a foreign merchant. These fees are typically 1%–3% of the value of the transaction and are paid by U.S. travelers in dollars.

The best way to avoid foreign transaction fees is to acquire a no-foreign-transaction-fees credit card, if you qualify for one. Next in line are checking accounts or debit cards with no foreign transaction fee. It is also possible to avoid the fee by paying in the local currency for purchases.

A foreign transaction (FX) fee is a surcharge on your credit card bill that appears when you make a purchase that either passes through a foreign bank or is in a currency other than the U.S. dollar (USD). This fee is charged by many credit card issuers, typically ranging from 1% to 3% of the transaction.

A foreign transaction fee is charged by your bank or card issuer when you make a purchase in a foreign currency or through a non-domestic bank. It's usually a percentage of the transaction amount, and is sometimes called an administrative fee.

These fees apply whenever you make a purchase with your card from a non-U.S. retailer, so if you buy an item online from a company based in another country, you could be charged the fee.

It's possible to get a foreign transaction fee waived, but it isn't easy. Call your credit card issuer's customer service department and request that they waive the fee. It works best if you've had the credit card for many years, but even then, there's no guarantee the issuer will waive the fee.

Not all credit cards charge a foreign transaction fee, but many do. To find out if your card does, check the “fees” section of the terms and conditions for your card.

As long as you have a credit card with no foreign transaction fees, notify your credit card company of your travel plans, and only pay for purchases expressed in terms of the local currency, you should be able to avoid post-trip credit statement surprises.

What credit card doesn't charge foreign transaction fees? ›

Using a credit card with no foreign transaction fees and choosing to make purchases in local currency will nearly always save you money. Currency conversion apps can help you better understand pricing and identify hidden charges.

You can avoid all transaction fees by paying for your purchases in cash while you're abroad. Banks and currency exchange stores will exchange U.S. dollars for most major currencies, and you can do this before you leave.

Foreign transaction fees generally range from 1 percent to 3 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.

There are five cards that do not charge a foreign transaction fee. They are the Scapia Federal Bank Credit Card, Axis Bank Burgundy Private Credit Card, RBL World Safari Credit Card, Club Vistara IndusInd Explorer Credit Card, and IDFC First Wow Credit Card.

Your credit card provider will use a conversion rate offered by Visa, Mastercard or American Express. This will usually be better than the rate you would get from the retailer or ATM. Expect a small currency conversion fee and, if you're withdrawing cash, a cash transaction fee.

Banks rarely refund foreign transaction fees once they have been assessed on legitimate transactions.

Depending on the credit card you use when traveling abroad, you could pay fees that total 6% or more of purchases. Using a credit card with no foreign transaction fees and choosing to make purchases in local currency will nearly always save you money.