Avoid the sting of fees when you travel overseas with your cards
When you’re traveling internationally, you may be subject to a fee on every credit card purchase you make. The foreign transaction fee increases the cost of using your credit card on international travel without providing any extra benefits. Using a no foreign transaction fee credit card can eliminate the extra fees you pay on international transactions and save you hundreds of dollars in unnecessary fees.In this guide, you’ll learn what a no foreign transaction fee is and why it’s important to use one, how to compare no foreign transaction fee credit cards, and get answers to common questions about no foreign transaction fee credit cards.
No Foreign Transaction Fee Credit Card Guide
Rates last updated January 20th, 2017.
- Barclaycard Ring Platinum MasterCard
APR for purchases, BT and cash advance are all 8.25%
January 8th, 2016
- Barclaycard Arrival Plus World Elite MasterCard
50k bonus miles + 0% APR for 12 months on BT + APR for purchases of 16.24% or cash advance of 25.49%
September 17th, 2016
What’s in this guide?
- Why you would want to avoid a foreign transaction fee
- What is a no foreign transaction fee credit card?
- How to choose
- No foreign transaction fee credit card vs. using cash
- Drawbacks of no foreign transaction fee credit cards
- Frequently asked questions
Why you would want to avoid a foreign transaction fee
To understand what a no foreign transaction fee credit card is, first let’s understand foreign transaction fees and how they work.
Many credit cards charge a fee on all transactions processed outside of the United States. The fee – a foreign transaction fee – is charged regardless of where you are when you make the purchase. You can be charged a foreign transaction fee even when you’re making purchases from the comfort of your own home.
The foreign transaction fee is typically a percentage, often 3%, of the transaction in U.S. dollars. It’s charged whenever you make a purchase from a company located in another country or a business uses a credit card processor that’s located outside the United States.
Foreign transaction fees aren’t based on the type of currency and might be charged even when the purchase is made in U.S. Dollars. Some credit card issuers charge a slightly lower foreign transaction fees for purchases made in U.S. Dollars versus those made in another currency.
The 3% fee may not sound like much. It’s just under $5 on a $150 transaction. If you don’t travel internationally or you don’t do business with companies outside the U.S., you may not mind paying a few dollars here and there. However, if you travel outside the country, you can easily spend thousands of dollars on hotel stays, transportation, food, and other travel expenses. Spending $3,000 on foreign transactions will result in $100 in foreign transaction fees. It’s an expense you can easily avoid with the right credit card.Back to top
What is a no foreign transaction fee credit card?
A no foreign transaction fee credit card is one that doesn’t charge a fee on purchases you make in other currencies. Using a no foreign transaction fee credit card when you’re traveling can save you hundreds of dollars in additional fees over the lifetime of the credit card.
What’s great about a no foreign transaction fee is that the savings is automatic. You don’t have to make any redemption or take extra steps to have the foreign transaction fee waived; the fee simply isn’t charged to you at all.
No foreign transaction fee credit cards might come with other perks like rewards or introductory rates on balance transfers or purchases. These perks make the card more beneficial for using even when you’re not traveling out of the country.Back to top
How to choose a no foreign transaction fee credit card
The lack of a foreign transaction fee itself is a great work, but it’s not the only thing that matters in a credit card. As you considering no foreign transaction fee credit cards, consider the other features of the credit card to choose the best one for you.
- Annual fee. If you want to avoid foreign transaction fees, you might also want to minimize your credit card cost by avoiding the annual fee, too. Some rewards no foreign transaction fee credit cards may charge an annual fee. Before you choose a card with an annual fee, make sure the benefits are worth paying an additional fee.
- APR. The annual percentage rate, or APR, on the credit card influences how much interest you pay whenever you do not paying your balance in full during the grace period. It’s best to pay your balance in full to avoid interest and debt. In the chance that you revolve a balance, a lower annual percentage rate will minimize the amount of interest you pay on balances you carry.
- Promotional rates. Some no foreign transaction fee credit cards offer 0% introductory promotional interest rates on balance transfers or purchases or both. You’ll pay no interest during the promotional period as long as you make your payments on time. With a low promotional rate, you can use your credit card to book a trip and make purchases while you’re traveling at no interest and with no foreign transaction fee. Consider also the length of the promotional rate and the interest rate after the promotion ends.
- Rewards. No foreign transaction fee credit cards commonly pay rewards that you can use toward future travel. With a credit card that pays rewards, pay close attention to the rewards you earn for each dollar you spend. Look for a credit card that pays the most rewards on the categories where you typically spend the most money. Be sure also that the rewards you earn are rewards you can use.
- Sign up bonus. Many rewards credit cards offer a sign up bonus, which is a lump sum of rewards that you can earn by spending a certain amount of money within the first few months of having the credit card. Compare sign-up bonuses based on the amount of the bonus you can earn and the amount you have to spend to earn the bonus. Keep in mind that your spending habits and credit limit will influence your ability to meet the spending requirement.
- Security features. Many credit cards now feature safer EMV chip technology, which makes it more difficult to copy or duplicate the credit card. Fortunately, many foreign countries already accept EMV chip credit cards. Look for a no foreign transaction fee credit card with EMV chip technology for safer transactions when you’re traveling abroad.
- International credit card acceptance. Don’t take for granted that your card will be accepted while you’re traveling to other countries. Visa and Mastercards are widely accepted worldwide. However, Discover and American Express are not as widely accepted in other countries. Consider where you’re likely to travel and research to learn whether the credit card network is widely accepted in that country.
- Other credit card perks. Many no foreign transaction fee credit cards include other travel perks. These perks can make the credit card even more worth using. Benefits like travel insurance, waived baggage fees, and priority boarding are things that you should consider when you’re choosing a no foreign transaction fee credit card. Read the fine print of these perks to be sure they continue to apply when you travel internationally.
No foreign transaction fee credit card vs. using cash
You might wonder if it’s easier to carry cash as a way to avoid paying foreign transaction fees. Cash is universal and many countries accept US dollars, so you may consider opting for cash however a credit card is often a better choice. While you may carry some cash for smaller purchases, like restaurants, a credit card is a better option for the majority of your purchases.
First, carrying cash is riskier in many countries because of the increased presence of pickpocketers. This is especially common in tourist-heavy areas of the world. If your cash is stolen, you can’t recoup your funds. On the other hand, your credit card issuer likely has a zero fraud liability policy that will eliminate your responsibility for charges made on a stolen credit card.
Carrying cash can make traveling more cumbersome, depending on the amount you’re carrying. Some countries will require you to make a declaration if you carry cash through customs over a certain amount. Failing to declare your cash can result in stiff penalties. You don’t face the same requirements if you carry a credit card.
Using your credit card to get cash from an ATM can get expensive. You’ll have to pay an ATM fee, a cash advance fee, and you will start accruing interest on the cash advance balance right away.Back to top
Drawbacks of no foreign transaction fee credit cards
While the ability to avoid paying a foreign transaction fee is attractive to many credit card users, there are some drawbacks no foreign transaction fee credit cards.
- There’s a limited number of credit cards to choose from. There are hundreds of credit cards on the market, but only a small number of them are no foreign transaction fee credit cards. This means that only have a select number of credit cards to choose from.
- They may not offer the best rewards. If you’re looking for a o foreign transaction fee credit card to double as your main rewards credit card, you may not be happy about your options. Many credit cards that fit this category require lots of spending to provide noticeable benefits.
- You may still pay fees. While a no foreign transaction fee credit card let’s you avoid paying foreign transaction fees, that doesn’t mean that you are exempt from other sheets. You can end up paying an annual fee late fee or transactional fees like a cash advance fee on the credit card. Make sure you’re aware of the fees your credit card charges and what you need to do to avoid paying these fees if you want to keep your credit card as close to free as possible.
Frequently asked questions
Getting answers to some common questions will help you better understand how no foreign transaction fee credit cards work. Once you’ve chosen a credit card, this knowledge will help you manage your credit card well.
How will I know if a credit card is a foreign transaction fee card?
If a credit card doesn’t charge a foreign transaction fee in, you can be sure that the credit card issuer markets this benefit prominently in its credit card offers. You can also check to the credit card pricing disclosure to find out whether a card issuer charges a foreign transaction fee. If you have trouble locating the foreign transaction fee for a credit card, call the credit card issuer to find out whether the card charges a foreign transaction fee or not.
What do I need to know about traveling with a credit card?
Before you travel internationally, give your credit card issuer a call to let them know that you’re going to be making purchases in other countries. This way your credit card issuer won’t flag your international purchases as fraud.
Can the credit card issuer later add a foreign transaction fee?
Your credit card issuer is allowed to change the terms of your credit card. This includes adding a foreign transaction fee. Fortunately, the credit card issuer isn’t allowed to change terms of the credit card without letting you know first.
If the credit card issuer decides to add a foreign transaction fee, you should receive a notification from the credit card issuer 45 days before the change is effective. You should also be given a chance to opt out of the change in terms, meaning that you reject the addition of a foreign transaction fee to your credit card. In response, your credit card issuer may decide to cancel your credit card account. You’ll be allowed to pay off your balance under the current terms, but you won’t be allowed to make additional purchases. If this happens to you, start looking for another no foreign transaction fee credit card.
Can I get more than one no foreign transaction fee credit card?
There is no limit to the number of no foreign transaction fee credit cards you can have. You may choose to have multiple no foreign transaction fee credit cards to increase your spending ability or to take advantage of different rewards programs. As long as you meet the credit requirements, you can have as many no foreign transaction fee credit cards as you can be approved for. Be careful when you have multiple credit cards that you don’t get into more debt than you can handle.
What kind of credit do I need to qualify for a no foreign transaction fee credit card?
There are several different no foreign transaction fee credit cards that you can apply for. You will typically need to have good to excellent credit to qualify for one of these credit cards. The better your credit score, the more likely it is that you can qualify for a no foreign transaction fee credit card that has great perks and rewards.
What other fees should I be concerned about?
With a no foreign transaction fee credit card, you may be subject to other fees that are typical with a credit card. You may pay an annual fee, particularly if this card is a top tier rewards credit card. You are also subject to a late fee if you make your monthly payment after the due date, a balance transfer fee if you transfer a balance to the credit card, and a cash advance fee if you use your credit card to get cash or as overdraft protection for your checking account. Besides the annual fee, most other credit card fees can be avoided depending on how you use your credit card.