What are international or foreign transaction fees? Learn about the costs of cross-border financial transactions and how you can avoid them.
An international transition fee (also known as a foreign transaction fee) is charged to you, the consumer, by your bank credit card company whenever you buy something in a foreign currency.
And while most of these charges are applied when you’re travelling or in another country, they can also be added to your bill when you make a purchase online in a different currency.
How much should you expect to pay in fees?
According to the Bank of America, the average international transaction fee is typically around 3%1. This fee also depends on the terms and conditions of your credit or debit card.
1% of that fee may go to the payment processor, whether it’s Visa or MasterCard, and the other 2% might go to the bank that issued your credit or debit card.
3% may not sound much, but these fees can quickly add up if you’re making a lot of small purchases regularly, or if you’re making a large purchase.
For example, if you spend $100 on your card and your international transaction fee is 3%, you’ll be paying an extra $3. But if you spend $1,000, you’ll be paying an extra $30.
On top of that, some credit cards also charge a 3 – 5% margin on the market rate for the day.
What is the Market Rate?
The Market Rate, also known as the “interbank rate” or the “mid-market rate,” is essentially the ‘wholesale rate’.
Wholesale rate is typically available only to large financial institutions or those who purchase large volumes of currency.
Looking to send money internationally? Compare currencies and get real-time market rates.
This rate is at the credit card company’s sole discretion, and you may not know how big is the margin you’ll be charged in advance. International transaction fees can make your shopping more expensive, but there are ways to avoid them.
How to avoid international or foreign transaction fees
1. Check your credit cards’ terms and conditions
You might have a card that doesn’t charge these fees. Consider using this card whenever you’re planning on purchasing products from abroad, as well as when you travel overseas.
2. Look for cards that don’t charge an international transaction fees
If you regularly travel overseas or often shop online in a foreign currency, you may want to consider applying for a credit card that doesn’t charge any international fees.
When applying for a new card, remember to check the annual fee as well. This is a lump sum fee you have to pay every year that you’re signed up for certain credit cards.
3. Use a money transfer service
Ask your vendor if they accept payment directly to their bank account. If they do, you can use a money transfer service like OFX.
OFX may have lower or no transaction fees and a better exchange rate. However, in some regions, a third party intermediary or bank may deduct a fee from the value of the transfer. This fee may vary and OFX receives no portion of it.
Plus, you can make transfers in 50+ different currencies to over 170 countries (and counting), 24/7 on your own schedule, not your bank’s.
When you’re comparing exchange rates offered, remember to consider both the exchange rate that is quoted and any transaction fees.
“The online portal is good for smaller amounts and calling for a better rate on larger transfers is quick and easy. The rates are better than the banks and there are no exorbitant fees.” – Peter, OFX client
Enjoy extra savings on your first transfer
New to OFX? Take advantage of a great introductory rate across 7 currencies (AUD, USD, SGD, GBP, NZD, EUR, CAD) on your first personal transfer. Terms and conditions apply.
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Related Questions
What currencies can I make a transfer with OFX
How Much Does It Cost to Send Money Internationally?
IMPORTANT:The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Limited (trading as OFX) and its affiliated entities make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog
An international transaction fee is charged to you, the consumer, by your credit card company whenever you buy something in a foreign currency. And while most of these charges are applied to travelers, they can also be added to your credit card bill when you make a purchase online from a foreign vendor.
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.
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.
What Is a Foreign Transaction Fee? A foreign transaction fee is a charge assessed by a financial institution to a consumer who uses an electronic payment card to make a purchase in a foreign currency.
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.
Many banks offer credit cards with no foreign transaction fees, including the HSBC Low Interest Rate Credit Card and the Westpac Lite Credit Card for example. Or as an alternative, check out a non-bank provider like Wise or Revolut for a no foreign transaction fee card with low overall fees.
Banks that have no foreign transaction fees on at least some credit card purchases, ATM withdrawals and debit card transactions include Capital One and HSBC.
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.
It's possible to use a debit card to pay for things when traveling internationally. However, it's always important to be prepared. By planning ahead and taking care with each transaction, people can avoid potential extra expenses such as foreign transaction fees or ATM withdrawals.
Plain and simple: If you buy something outside the U.S. and use the "wrong" credit card, you'll be hit with an extra fee. However, there are many options for the "right" credit cards to use when traveling or shopping overseas to avoid foreign transaction fees.
Kroo Bank. This is another free current account. And there are no fees for spending or withdrawing cash with the linked Kroo debit card when you're abroad.
It's worth noting that, should things go wrong with something you buy overseas, credit cards offer stronger protection than debit cards – credit cards give Section 75 protection, whereas debit cards give the lesser, but still useful, chargeback protection.
Digital wallets are independent of banks and can hold funds in multiple currencies, with transparent exchange rates. Because of this, they can circumvent many of the fees and costs associated with wire transfers, making it even easier to send money abroad, all over the world.
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.
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