What are foreign transaction fees and how to avoid paying them

Using a credit card can be convenient when you’re traveling, especially when you’re staying at hotels, booking rental cars and can benefit from travel-related credit card perks. However, you might wind up paying a lot more for your trip if your card charges foreign transaction fees. Here’s what to know about these fees and how to avoid them.

What are foreign transaction fees?

Foreign transaction fees are transaction-based fees that some credit and debit cards charge when:

• You use your card to make an in-person purchase while you’re outside the United States.
• You use your card to buy something online that’s sold in a foreign currency.

Generally, the foreign transaction fee will be around 1% to 3% of the purchase amount. The fee is added to your credit card balance, and if you don’t pay your balance in full each month, you could accrue interest on your purchases plus the foreign transaction fee. Plus, you generally don’t earn credit card rewards on fees. 

Why do credit cards have foreign transaction fees?

Credit card issuers may charge foreign transaction fees to help cover the cost of converting currencies and processing international transactions. Some card issuers don’t charge these fees or offer cards without a foreign transaction fee. With these cards, the card issuer may be covering the costs in an attempt to attract more cardholders who they can earn money from in different ways. 

Foreign transaction fees by credit card issuer

Not every card has a foreign transaction fee, even cards from the same bank. The typical foreign transaction fee on some of the most well-known credit card issuers for the cards that do levy this fee include:

ISSUING BANK	TYPICAL FOREIGN TRANSACTION FEE
American Express	2.70%
Bank of America	3%
Barclays	3%
Capital One	None
Chase	3%
Citi	3%
Discover	None
Navy Federal Credit Union	None
Pentagon Federal Credit Union	None
U.S. Bank	3%
Wells Fargo	3%

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Most major credit card issuers offer cards that either don’t have foreign transaction fees or have a 3% fee. However, you may find credit cards with lower fees — such as 1% to 2% — from smaller card issuers and credit unions.   

How to avoid foreign transaction fees

There are two basic ways to avoid foreign transaction fees.

1. You could use a credit card or debit card that doesn’t charge foreign transaction fees. Although the fee is common, many credit cards — including options for people who are brand new to credit or rebuilding their credit — don’t have foreign transaction fees. Sometimes it even makes sense to open a new credit card without the fee to use during an upcoming trip. 

2. Pay for purchases with cash instead of a card. You still need to beware of fees when you withdraw cash. Some banks charge a foreign transaction fee on ATM withdrawals, plus there could be additional ATM withdrawal fees. However, you can also find bank accounts that don’t have foreign transaction fees on debit cards and refund ATM fees.

What about paying in U.S. dollars while abroad?

Some stores and ATMs will offer to convert the transaction to dollars before accepting your payments. It might sound like a good idea and you’ll easily see how much you’re spending in dollars. But declining will often save you money. 

The process usually relies on a dynamic currency conversion (DCC), which might have a high conversion fee or unfavorable exchange rate. To make matters worse, you could still have to pay a foreign transaction fee because you’re using your card while outside the U.S. 

Credit cards with no foreign transaction fee

When you’re looking for a credit card that doesn’t charge foreign transaction fees, you may want to start by checking your credit score to determine which cards you can likely qualify for. Also, consider what type of card and card issuer you’d prefer. 

For example, Discover and American Express cards might not be as widely accepted in some destinations abroad as cards on the Visa and Mastercard payment networks.

Although some people prefer opening new credit cards from banks or issuers where they already have an account, that’s not a requirement. You can choose a card from any issuer based on the card’s merits, and then easily set up automatic payments from your bank account. 

Here are a few examples of credit cards that don’t have foreign transaction fees.

Cards to consider if you’re new to credit or rebuilding your credit

These cards don’t require a strong credit history — or any credit score. They also don’t charge annual fees, and you can earn rewards on eligible purchases.

• Capital One Quicksilver Secured Cash Rewards Credit Card * The information for the Capital One Quicksilver Secured Cash Rewards Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.
• Discover it® Secured Credit Card
• Petal® 1 “No Annual Fee” Visa® Credit Card * The information for the Petal® 1 “No Annual Fee” Visa® Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. (issued by WebBank)
• Petal® 2 “Cash Back, No Fees” Visa® Credit Card * The information for the Petal® 2 “Cash Back, No Fees” Visa® Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. (issued by WebBank)

Cards to consider for travel rewards and perks

These travel cards may require a good to excellent credit score, but they also offer high rewards rates on certain purchases and come with perks that can make traveling more pleasant or less expensive.

• Capital One Venture X Rewards Credit Card * The information for the Capital One Venture X Rewards Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.
• Chase Sapphire Reserve®
• Bilt World Elite Mastercard® (No Foreign Currency Conversion Fee) (rates & fees)

See our list of the best no foreign transaction fee credit cards to help pick the best card for your needs. 

Frequently asked questions (FAQs)