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No-foreign-transaction-fee credit cards
Avoid the sting of fees when you travel overseas with your cards.
Compare cards with no foreign transaction fees
No foreign transaction fee cards by issuer
What's in this guide?
- Compare cards with no foreign transaction fees
- No foreign transaction fee cards by issuer
- Foreign transaction fees by credit card issuer
- What is a foreign transaction fee?
- What is a no foreign transaction fee credit card?
- How to choose a no-foreign-transaction-fee credit card
- How can I avoid foreign transaction fees?
- Drawbacks of cards without foreign transaction fees
Foreign transaction fees by credit card issuer
|Card issuer||Average foreign transaction fee||Lowest foreign transaction fee||Highest foreign transaction fee|
|Bank of America||0%||0%||3%|
|US Bank||3%, or 2% in USD||0%||3%, or 2% in USD|
What is a foreign transaction fee?
A foreign transaction fee is a charge assessed for using your credit or debit card for an international purchase.
Many cards charge a fee on all transactions processed outside of the US. The 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 shopping online at home.
How much are foreign transaction fees?
The foreign transaction fee is typically a percentage, often 3%, of the transaction in US dollars (USD). However, foreign transaction fees vary depending on your card and your card provider.
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 US, a few dollars here and there won’t hurt as bad.
However, if you travel outside the country, you can easily spend thousands of dollars on hotel stays, transportation, food and other travel expenses.
When is a foreign transaction fee applied?
Credit card providers may apply a foreign transaction fee for any of the following transactions:
- Overseas transactions
- Transactions made online in a foreign currency
- Transactions made with a retailer outside of the US
Credit card companies can charge foreign transaction fees even when the purchase is made in USD, though some companies charge less than purchases made with other currencies.
Case study: How do foreign transaction fees work
Let’s say you’re paying $1,000 for an overseas accommodation and use a card that charges a 3% foreign transaction fee, the additional cost would be $30. Similarly, if you were shopping online and spent $100 with a retailer overseas, you could expect to pay $3 extra.
Even though this percentage can seem like a small amount, with large expenses like travel-related costs, these extra fees can add up to a substantial amount over time.
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 using a card with no foreign transaction fees 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.
How to choose a no-foreign-transaction-fee credit card
The lack of a foreign transaction fee itself is a great perk, but it’s not the only thing to focus on when choosing a credit card.
- 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. Some cards without foreign transaction fees charge an annual fee for strong rewards or perks. Make sure any benefits are worth the additional fee.
- APR. The annual percentage rate influences how much interest you pay whenever you don’t pay your balance in full during the grace period. It’s best to pay your balance in full to avoid interest and debt. But if you carry a balance, a lower annual percentage rate will minimize the amount of interest you pay on balances you carry.
- Promotional rates. Some cards without foreign transaction fees offer 0% introductory promotional interest rates on balance transfers, on purchases or on 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. Cards with no foreign transaction fees 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.
- Signup 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 signup 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.
How can I avoid foreign transaction fees?
Here are some options that allow you to avoid or minimize foreign transaction fees:
- No foreign transaction fee credit cards.
These are credit cards tailored for international use and allow you to spend without any foreign transaction fees. Some of them, like the Chase Sapphire Reserve®, come with complimentary travel perks.
- No foreign transaction fee debit cards.
Stay on the lookout for a debit card with low or no foreign transaction fees — some even waive international ATM withdrawal fees. The upside of using a debit card is that there is no interest since you’ll be spending your own money.
- Prepaid travel money cards.
Consider travel money cards, which offer the convenience of credit cards without the costs of international transaction fees or ATM withdrawal fees.
- Foreign cash.
Using cash eliminates bank transaction and ATM fees, but you may still have to pay a fee for the currency exchange. You could also use a money transfer service to send money to your destination and pick it up when you arrive. Be careful with large amounts of money — if you lose it, it’s not replaceable.
- Traveler’s checks.
These can help you avoid international transaction fees, but they are slowly being phased out because of other fees and limited acceptance.
- Foreign partners of your bank.
Check with your bank if it’s in an ATM alliance with financial partners abroad. If so, you may be able to use a foreign bank’s ATMs with waived fees.
Avoiding international transaction fees can result in some savings over time, but may not be the right option for every traveler. Always consider a range of payment options before traveling overseas or shopping online to make the most out of your money.
Common mistakes to avoid when using no-foreign-transaction-fee travel credit cards
- Withdrawing cash.
Just because a card doesn’t charge foreign transaction fees doesn’t mean you won’t pay fees for withdrawing cash. In actuality, you’ll be hit with cash advance fees, and your transactions will start accruing interest at a higher cash advance APR.
- Forgetting about currency conversion.
Foreign transactions are usually converted to USD at the applicable exchange rate. Because of this you might not know exactly how much your purchase will add to your balance before it posts to your account. Keep currency conversion in mind so you don’t exceed your credit limit.
- Paying off your balance only partially.
If you don’t pay off your balance in full by the due date each billing period, the remaining balance will start accruing interest.
No foreign transaction fee credit card vs. using cash
When you’re traveling overseas, whether to carry cash or credit depends on where you’re traveling and what your plan to purchase. Cash is universal, and many countries accept US dollars, 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 hotels and car rentals.
Carrying cash is riskier in cities because of the chance of being pickpocketed. 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 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, with an ATM fee, a cash advance fee, and you’ll start accruing interest on the cash advance balance right away.
Drawbacks of cards without foreign transaction fees
While the ability to avoid paying a foreign transaction fee is attractive to many credit card users, there are some drawbacks.
- 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 come with no foreign transaction fees. This means that you only have a select number of credit cards to choose from.
- They may not offer the best rewards. If you’re looking for a no 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 you won’t pay foreign transaction fees, these cards can charge high annual fees, late fee or transaction fees. Be 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 these credit cards work. Once you’ve chosen a credit card, this knowledge will help you manage your credit card well.
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