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If you’re a frequent international traveler, you’re probably familiar with foreign transaction fees, those pesky extra fees charged by your credit card company on every purchase you make outside of the U.S.
The fees can also be charged on transactions made with foreign banks,even if you’re making the purchase from the U.S. For example, if you purchase an airline ticket from a foreign company, you may be charged a foreign transaction fee.
Foreign transaction fees are widely unpopular, especially with travelers frequently paying their foreign expenses with credit cards. As a result, the list of credit cards that don’t charge these fees is growing as issuers introduce new card products without foreign transaction fees and remove them from some existing cards.
Let’s take a look at these fees and some of the best cards you can use to avoid them.
What You Should Know About Foreign Transaction Fees
What Is a Foreign Transaction Fee?
Foreign transaction fees are assessed by your credit card issuer on any transaction processed by a foreign bank. The common rate is around 3% of the total foreign purchase amount, and there is no limit as to how much can be charged.
These fees are perfectly legal, but more and more credit card companies are eliminating them since informed travelers choose credit cards that don’t charge foreign transaction fees.
How To Find Out if a Credit Card Charges a Foreign Transaction Fee
In some cases, the promotional summary for a credit card doesn’t disclose whether there is a foreign transaction fee charged on the card. You may need to dig deeper to find out for certain.
Fortunately, all of the financial information you’ll need can be found in what’s known as a Schumer Box. It’s named after Charles (Chuck) Schumer, the congressman responsible for the legislation that requires credit card companies to clearly disclose costs and terms associated with each card.
All credit card companies must use a standard format for the Schumer Box, so comparing cards became much easier after this legislation was passed in 1988.
For a credit card you’re considering, you can review the Schumer Box online for that specific card by clicking on a link titled:
Rates & Fees
Terms & Conditions
Pricing & Rates
Interest Rates & Fee Summary
…or a link with a similar name
Here’s what you’ll see in the Schumer Box if the credit card you’re researching doesnot charge a foreign transaction fee:
Here’s an example of a section of the Schumer Box for a credit card that does charge a foreign transaction fee:
Determining if your existing credit card charges a foreign transaction fee:
Call Your Credit Card Company — Contact your credit card company and ask whether your card charges a foreign transaction fee by calling the phone number printed on the back of your card.
Review Your Paper Cardholder Agreement — When you received your new credit card in the mail, a cardholder agreement was included. In the agreement, there’s a chart similar to the ones illustrated above that lists all the fees assessed on your card.
Access Your Account Online — Sign in to your online credit card account to access your cardholder agreement, which will include a breakdown of all fees and charges.
Bottom Line: While a 3% foreign transaction fee might not seem like much, it can add up quickly, whether you’re a frequent traveler or just take 1 big trip a year. In any case, by selecting a credit card without the fees, you won’t come home to a billing statement full of additional foreign transaction charges on your purchases!
The 6 Best Personal Travel Rewards Cards With No Foreign Transaction Fees
Selecting a credit card that doesn’t charge foreign transaction fees is a real benefit for the traveler. But, there are so many credit cards in the marketplace without these fees that savvy travelers will want to choose a card that delivers even more benefits.
Let’s look at our picks for some of the top cards for international travel that have no foreign transaction fees.
Add in the hundreds of dollars of savings in the form of statement credits for specific purchases and the card easily earns a place in any frequent traveler’s wallet.
The Amex Gold card has an identity problem. On one hand, it shines as an everyday rewards-earning card for spending at restaurants and at U.S. supermarkets, yet it also rewards specific travel purchases. And, at redemption time, Membership Rewards points earned on the card are there for good-value travel redemptions whether via Amex Travel or transferring points to the Amex travel partners.
We like that the card is so diverse and also that it also offers a generous upfront welcome bonus.
Bottom Line: The American Express collection of no foreign transaction fee credit cards offers strong benefits for the frequent traveler and options equally suited to those with loyalty to a specific brand. A combination of cards could offer the perfect umbrella of benefits for the frequent traveler. See our full list of Amex credit cards if you’re looking for even more choices from American Express.
3. Chase Sapphire Reserve®
It’s difficult to compete with the Amex Platinum card when it comes to premium travel rewards cards, but the Chase Sapphire Reserve card also earns a successful nod as one of the best travel rewards cards.
We like that cardholders receive a $300 statement credit for travel purchases each year and that the card comes with complimentary Priority Pass Select membership that will give you access to over 1,300 airport lounges worldwide.
It’s not difficult to realize significant value with the card if you’re a frequent traveler, especially when earning and redeeming valuable Ultimate Rewards points for great value.
4. Chase Sapphire Preferred® Card
As one of our favorite travel rewards cards, the Chase Sapphire Preferred card is a perfect choice for your first travel rewards-earning card. Not only will you receive elevated earnings on dining and travel, but at redemption time you’ll receive 25% more in value for your points via the Chase travel portal.
Bottom Line: The Chase Sapphire Preferred card and the Chase Sapphire Reserve card earn valuable Chase Ultimate Rewards points that can be redeemed for travel for up to 50% more in value through the Chase Ultimate Rewards travel portal or transferred to hotel and airline partners for even greater potential value.
5. Citi Premier® Card
You’ll have lots of earning power with 3x points at restaurants, gas stations, supermarkets, hotels, and air travel.
You’ll have choices at redemption time, too, when your ThankYou Points can be redeemed for travel, merchandise, and gift cards or transferred to travel partners.
6. Capital One Venture Rewards Credit Card
The Capital One Venture card earns 2x miles per dollar spent on every purchase you make.
The 3 Best No-Annual-Fee Travel Rewards Cards With No Foreign Transaction Fees
No foreign transaction fee credit cards that offer the highest levels of rewards and benefits typically charge an annual fee. However, there are plenty of no foreign transaction fee cards that do not charge an annual fee; here’s a sampling of those cards:
The Capital One VentureOne card keeps it simple when it comes to earning rewards with 1.25 miles earned per dollar spent on every purchase you make.
You’ll then have several options at redemption time including purchase merchandise, or gift cards. For the potential of greater value, you can also transfer miles to travel partners.
3. Bank of America® Travel Rewards Credit Card
We like that the Bank of America Travel Rewards card offers unlimited 1.5x points for every dollar spent, has no annual fee, and has no foreign transaction fees.
One big reason we like this card is that if you’re a Preferred Rewards member, you can earn 25%-75% more points on every purchase. That means instead of earning an unlimited 1.5 points for every $1, you could earn 1.87-2.62 points for every $1 you spend on purchases.
Bottom Line: You don’t have to pay an annual fee to secure a credit card that doesn’t charge foreign transaction fees!
The 2 Best Business Travel Rewards Cards With No Foreign Transaction Fees
If you own a business, even a small business, that involves travel, you’ll certainly want to have a travel rewards card that doesn’t charge foreign transaction fees.
Here are 2 of the best business travel rewards cards available.
1. Ink Business Preferred® Credit Card
You’ll want your highest business expenses to earn rewards and the Ink Business Preferred card delivers. You’ll also find a nice collection of travel benefits and plenty of flexible options at redemption time to ensure you receive top value for Ultimate Rewards points earned on the card.
With international airport lounge access and a 35% rebate when using Membership Rewards points for flights, the frequent business traveler could find tremendous value with the Amex Business Platinum card.
You’ll also find hundreds of dollars in statement credits for specific purchases and earnings of 1.5x points on eligible purchases in key business categories, as well as on purchases of $5,000 or more everywhere else (up to $2 million in purchases per calendar year).
If you’d like to learn more about these 2 popular business travel rewards cards, check out our in-depth comparison of earnings, redemption options, benefits, and more.
Bottom Line: Select a no foreign transaction fee business credit card based on the spending profile of your business to maximize earning rewards. You’ll also want to make sure the spending levels of your business offset any annual fees, and that your travel is frequent enough to maximize the travel benefits offered with each specific card.
Please note that any additional benefit information we’ve provided is abbreviated and for general comparison purposes only.
All of the cards reviewed earn at least 1 point or mile per dollar spent on every purchase, so we’ve only included earnings in the additional benefits section that exceed this level.
A complete list of benefits and current card offers is provided when accessing each credit card summary page individually. Additional terms and conditions apply.
Once you’ve selected a credit card that charges no foreign transaction fees, you’ll want to make sure you minimize the plethora of other fees you might incur when securing foreign currency abroad (or simply paying for your foreign purchase with a credit card).
You may be surprised to learn that you can be hit with several fees as a result of 1 simple foreign transaction!
Cash Advances Abroad
While using your no foreign transaction fee credit card for purchases when traveling is a smart move, using that same credit card to secure a cash advance when you’re traveling can trigger additional fees and interest charges.
In an emergency, it’s good to know that a cash advance is an option… but it’s also important to understand the potential cost of doing so, even on a card that doesn’t charge a foreign transaction fee.
Currency Conversion Fees
The term “currency conversion fees” is frequently used interchangeably with “foreign transaction fees,” but there is a difference.
Converting foreign currency costs money. When your bank is charged by the processing network (such as Visa or Mastercard) for converting your purchase made in foreign currency to U.S. dollars, it passes the expense on to you.
In some cases, the foreign transaction fee your bank charges you will include the currency conversion fee they have been charged (usually around 1%). The bank can also tack on additional fees, bringing the total to around 3%.
Bottom Line: Foreign transaction fees are just one of the charges you need to be aware of when paying for foreign purchases with your credit card and securing foreign currency while traveling. Referencing your credit card’s Schumer Box before traveling can help you avoid some of these fees.
Dynamic Currency Conversion
When you check out of your hotel or are presented with your dining bill in a foreign country, it might seem convenient that the total amount is already converted from the foreign currency to U.S. dollars. There’s no need to do any calculations to determine how much you’ll be paying — it’s been done for you!
This practice of presenting the bill in your home credit card’s currency (in this case U.S. dollars) is known as “dynamic currency conversion.” While it might seem convenient and harmless, the end results are not in your favor.
For example, let’s say you receive your foreign restaurant tab and there are 2 options for paying: you can select $106 or €86. You might do a quick calculation, think the totals make sense from a conversion perspective, and just pay the bill in U.S. dollars. Unfortunately, if you had paid €86, your U.S. bank would process the currency exchange based on the current rate — which in this case is closer to $96 (versus the higher $106 option on your bill).
Paying in U.S. dollars abroad adds a layer of cost to the transaction: U.S. dollars have to be converted to the local currency to pay the merchant, then back to U.S. dollars to bill you on your credit card.
When using a credit card, always pay your bill in the local currency of the country you’re in to ensure you get the best currency conversion rate.
Bottom Line: Never pay in U.S. dollars when using your credit card in a foreign country! If your bill is presented in U.S. dollars, ask that it be voided and changed to reflect the amount in local currency. If both options are available on the receipt, be sure the U.S. dollars option isn’t already checked before you sign the receipt.
Foreign ATM Fees
You may think you could avoid foreign transaction fees by using your debit card to withdraw money from foreign ATMs when traveling abroad. This is a logical assumption, plus ATMs are usually conveniently located and facilitate an easy transaction. But foreign ATMs can charge exorbitant fees.
Even if the foreign ATM fee is reasonable, your bank may add on foreign transaction fees, currency conversion fees, an out-of-network ATM fee, or other transaction fees.
Some banks (such as Charles Schwab Bank and Capital One 360) reimburse these fees, and other banks allow a limited number of fee-free transactions per statement period.
Bottom Line: To minimize bank charges when abroad, review the fee disclosures associated with your debit card before you travel, and try to limit your withdrawals to 1 per trip. You can also open an account that reimburses ATM fees or allows a limited number of fee-free withdrawals per month.
Final Thoughts
With the vast selection of credit cards that do not charge foreign transaction fees, it should be easy to find an appropriate card for your travel expenses that avoids these fees.
Remember to look at the Schumer Box for any credit card you’re considering, and learn about the fees charged on your current credit card before you travel.
With just a small amount of research, you can minimize the fees that make international travel more expensive and avoid returning home to a credit card statement full of unexpected charges.
For Capital One products listed on this page, some of the above benefits are provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply.
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The information regarding the Bank of America® Travel Rewards credit card was independently collected by Upgraded Points and not provided nor reviewed by the issuer.
For rates and fees of The Platinum Card® from American Express, click here. For rates and fees of the American Express® Gold Card, click here. For rates and fees of the Hilton Honors American Express Card, click here. For rates and fees of The Business Platinum Card® from American Express, click here.
Featured Image Credit: Upgraded Points
Frequently Asked Questions
A foreign transaction fee is a fee charged by your credit card issuer on every purchase you make that is processed through a foreign bank.
You can even be charged a foreign transaction fee if you’re in the U.S. and make a purchase with a foreign merchant in foreign currency. The fee is calculated as a percent of your total purchase, usually around 3%.
You can avoid foreign transaction fees by always using a card for your foreign purchases that does not charge them.
The majority of credit cards today don’t charge foreign transaction fees, and we’ve put together a collection of the best credit cards for frequent travelers in this post.
There are certain credit card issuers (such as Discover and Capital One) that do not charge a foreign transaction fee on any of their cards. For other cards, you’ll need to review the terms and conditions or rates/fee chart.
Credit card issuers are required to disclose any fees they charge on their credit cards. For an existing credit card, you can call the number printed on the back of your card, review the paper cardholder agreement that came with your card, or access your credit card account online.
For a credit card you are considering, a list of all of the fees/charges can be found in the Schumer box that can be accessed via a link on the summary or application page.
Christine ran her own business developing and managing insurance and financial services. This stoked a passion for points and miles and she now has over 2 dozen credit cards and creates in-depth, detailed content for UP.
Disclaimer: Any comments listed below are not from the bank advertiser, nor have they been reviewed or approved by them. No responsibility will be taken by the bank advertiser for these comments.
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