Credit cards with no foreign transaction fees are designed to help you save money when you’re traveling overseas or shopping online with an international retailer by offering you 0% fees for these transactions. In comparison, most other credit cards charge a fee worth 2–3% of each international transaction you make.
Use this guide to compare cards that don’t charge foreign currency conversion fees. We also go through different travel money expenses and how you can minimize them so that you get the most out of your money when you’re overseas or shopping online.
How to compare 0% foreign fee credit cards
If you want to get a credit card with 0% international transaction fees, compare the following key factors so you can find one that suits your needs.
- Currency conversion fees. While most credit cards charge a fee worth between 2–4% of each transaction made in an international currency, a card with a 0% currency conversion fee waives this cost. If you regularly travel or shop online with companies based overseas, this could help you cut costs.
- Overseas ATM withdrawal fees. Getting cash out of an ATM overseas can also attract a fee worth at least $3 or between 2-4% of the total transaction. Choosing a card which doesn’t charge for international ATM withdrawals can allow you to avoid this charge.
- Cash advance fees. Even if you get a credit card that offers $0 ATM fees overseas, using it to withdraw cash can attract a cash advance fee that’s typically between 2-4% of the transaction. You’ll also be charged interest at the cash advance interest rate, which is higher than the purchase rate on most credit cards.
- Annual fees. Credit cards offering 0% foreign fees may still charge an annual fee, which could be anywhere from $80-$400 or more. Ideally, the benefits you get from the card should outweigh the price of the annual fee.
- Purchase rates. If you’re using your card to make overseas purchases but won’t be paying back your balance in full each month, you’ll need to take the purchase rate into consideration.
- Other travel benefits. Some cards offer additional travel benefits, such as complimentary travel insurance, airport lounge access or bonus frequent flyer points for your spending. Make sure you meet any requirements listed to take advantage of these perks, otherwise they won’t add to the value of the card.
How much can I save with a 0% foreign fee card?
To give you an idea of the potential savings a credit card with 0% foreign fees offers, let’s say you spend $5,000 while you’re travelling overseas. If you had a card that charged a 2-3% fee on each foreign transaction, you’d pay around $100-$150 more for your spending.
A card with 0% foreign transaction fees would add $0 to your account balance. As well as saving you money on your spending, this would also cut down on interest charges and could help you pay off your balance faster.
How does foreign currency conversion work?
When you make a purchase or transaction in a foreign currency using an New Zealand credit card, the total amount needs to be converted into NZ Dollars. The conversion process varies based on factors including the card provider and whether it’s an American Express, Mastercard or Visa product.
Currency conversion exchange rates are updated on a daily basis, and apply even if you have a card that charges $0 foreign fees. Please note that most banks use an exchange rate that’s less competitive than the standard rate.
How will an exchange rate appear on my credit card statement?
Say you were on a trip to New York and used your New Zealand credit card to pay for a pair of shoes worth US$100. If the exchange rate between US dollars and New Zealand dollars was US$0.74 per NZ$1, then this transaction would be converted to NZ$135.14. So, instead of your credit card statement showing a transaction of US$100, it would show one of NZ$135.14.
What exchange rate will I receive?
Depending on the card you’re using, you will receive the exchange rate set by Mastercard, Visa or American Express. Cards might convert the foreign currency amount to USD before converting it to NZD (unless your transaction is already in USD) at the daily exchange rate, or convert your foreign currency amount directly to NZD at the daily exchange rate.
Foreign currency exchange calculators
What is Dynamic Currency Conversion?
Dynamic Currency Conversion (DCC) allows you to pay directly with NZ dollars at an overseas merchant, instead of converting the payment to a foreign currency. If you have travelled overseas, you may have been offered the choice of paying in the local currency or in NZ Dollars. By choosing to pay directly with New Zealand Dollars you will attract the DCC fee.
- How much is the DCC? The DCC ranges from 3-10%, so it’s sometimes more affordable to pay in the local currency instead.
- Is it a good idea to use DCC overseas? If the NZ Dollar has improved significantly against the foreign currency, you may still save money after incurring the DCC fee.
What other travel money options are available?
It’s often useful to have several ways to access money when you’re overseas. As well as a credit card, you may want to consider some of these other travel money products:
- Foreign cash. Having cash on hand when you’re travelling overseas can help you pay for any purchases where cards are not accepted (such as transport tickets). Using cash is also an easy way to avoid foreign transaction fees.
- Debit card. Your everyday Mastercard or Visa debit card can also be used overseas, wherever these brands are accepted. Just keep in mind that currency conversion fees may also apply for a debit card and be aware of the potential complications if your account’s security is compromised while you’re away.
- Prepaid travel money cards. A prepaid travel card allows you to load and spend funds in multiple currencies. This means you can spend your own cash and avoid currency conversion fees when spending in a supported currency.
If you’re a frequent traveller or regularly shop online with international retailers, a credit card that has 0% foreign transaction fees could help you keep your costs to a minimum. Just remember to compare a range of options and look at the other features available so that you can find a credit card that really suits your needs.
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