Are you planning a trip abroad? Some people might like to carry cash, while others might prefer the protection of using a credit card. But there could be a catch to using a credit card while traveling if you have to pay a foreign transaction fee every time you make a purchase. Even if you’re using a debit card, your financial institution could still tack on a foreign transaction charge.
The good news is that it’s possible to avoid foreign transaction fees altogether with some planning.
What is a foreign transaction fee?
A foreign transaction fee is an amount that credit card companies (and financial institutions) can charge when you use your card to make purchases in a foreign country.
Card issuers can charge foreign transaction fees to help cover the cost of converting currencies for international purchases. This differs from a monthly maintenance fee you might pay for an account.
You may also have extra fees for ATM withdrawals at an international ATM. Some of those fees could include the following:
- Foreign transaction fees
- Out-of-network ATM fees (charged by your financial institution)
- Usage fees (charged by the ATM’s owner)
- Currency conversion fees (charged by the ATM’s owner)
Sometimes, you don’t have to leave your home country to be charged a foreign transaction fee. For example, let’s say you buy clothes online from a merchant in South Korea. If the merchant processes the transaction in South Korean won instead of U.S. dollars, your bank might charge a foreign transaction fee to convert the currency.
How to calculate a foreign transaction fee
Foreign transaction fees typically range from 2% to 4% and are charged by approximately 90% of all credit cards.1 And, of course, there are plenty of credit cards with no foreign transaction fees at all.
Calculating what you’ll owe is fairly simple if you have to pay a foreign transaction fee. You multiply the purchase amount by the amount of the fee, expressed as a decimal.
For example, say you charge $1,000 to a card with a 3% foreign transaction fee. Your calculation would look like this: $1,000 x .03 = $30
Altogether, your purchase would cost $1,030 ($1,000 + the $30 fee). The higher the foreign transaction fee, the more international purchases will cost.
How to find foreign transaction fees
Credit card companies and banks are required to disclose their fees to customers. Where you can find that information usually depends on the card issuer or bank. Generally, there are two places where you can find fee information:
- In your cardholder agreement or deposit account agreement
- Online at the credit card company or bank website
For example, Bank of America®‘s foreign transaction fee information is listed in the terms and conditions for cards that charge this fee. Here are the terms and conditions for the Bank of America® Customized Cash Rewards as a reference.2 It’s included in the same section with information about other fees, including annual, balance transfer, and cash advance fees.
If you need help finding information about foreign transaction fees online or in your account agreement, you can always call the credit card company or bank to ask.
Compare foreign transaction fees
Foreign transaction fees vary from one credit card or bank account to the next, and the best way to avoid them is by choosing a credit card with no foreign transaction fees. Knowing what different banks or card issuers charge can help you decide which card might be right for you.
|Card||Maximum foreign transaction fee||Maximum foreign ATM fee||No foreign transaction fee cards offered?|
|American Express®3,4||2.70%||None if in-network||Yes|
|Bank of America®5||3%||$0 – $5 in addition to other applicable fees, depending on your account type||Yes|
|Capital One®6||None||None||All cards|
|Chase®7,8||3%||$5 per withdrawal and $3 for any transfers or inquiries, plus 3% of the withdrawal amount if withdrawing a foreign currency, plus any additional fees from the ATM owner||Yes|
|Chime®9||None||$2.50||Yes – Chime Credit Builder and Chime Visa® Debit Card|
How to avoid foreign transaction fees
Avoiding foreign transaction fees is relatively easy, and there are a few ways you can do it.
- Pay cash. Paying cash means you don’t have to worry about being charged any foreign transaction or card processing fees. You can stash your travel fund in a high-yield savings account until it’s time for your trip. Of course, that might not be practical if you’re shopping with merchants that don’t accept cash or you’re buying things online.
- Withdraw local currency. If you decide to pay in cash while traveling in another country, consider using ATMs that let you withdraw funds in local currency. That might allow you to avoid a foreign transaction fee for those transactions. You can also check to see if your bank refunds foreign ATM fees.
- Choose the right credit card. As mentioned, plenty of credit cards have no foreign transaction fees, and selecting a no foreign transaction fee card may be the simplest way to sidestep those added charges.
Credit cards with no foreign transaction fees
You have options if you’re looking for a credit card with no foreign transaction fees. When comparing cards, it’s helpful to look at the bigger picture. Consider:
- Rewards programs
- Introductory bonus offers
- Annual fees
- Annual percentage rates (APRs)
Here are some credit cards with no foreign transaction fees.
Disclaimer: The use of the company names below is for informational purposes only. Chime does not endorse, and is not affiliated with, any of these third-party financial institutions.
|Card||Annual fee||Rewards||Target audience|
|Chime Credit Builder9||None||N/A||People who want to build credit history while paying no interest10 or foreign transaction fees, even when traveling.|
|Bank of America Travel Rewards11||None||Cardmembers earn unlimited 1.5 points per dollar on purchases.||Travelers who want to earn a flat rewards rate with no annual fee.|
|Capital One Venture Miles12||$95||Cardmembers earn unlimited 2x miles per dollar on purchases.||Travelers who want to earn miles and don’t mind paying an annual fee.|
|Chase Sapphire Preferred®13||$95||Cardmembers can earn 1 to 5 points per dollar on purchases.||People who don’t mind paying a higher annual fee for travel benefits.|
|Discover it® Card14||None||Cardmembers earn 5% cash back in selected categories each quarter, up to the first $1,500 in purchases, and 1% unlimited cash back on everything else.||Everyday spenders who want a higher cash back rewards rate with no annual fee.|
If you want a straightforward secured credit card, the secured Chime Credit Builder Visa® Credit Card could be the right choice.
Credit Builder has no foreign transaction fees or annual fees, so using your card overseas won’t cost anything extra. And you can build credit with everyday purchases and on-time payments.15
Foreign transaction fees don't have to dampen your travel plans
A trip abroad allows you to see new places, meet interesting people, enjoy unique experiences, and create lifelong memories. Knowing how to avoid a credit card foreign transaction fee can help you make the most of your time away without worrying about added costs.
Preparing for your next overseas trip? Find out how Chime member Andre budgets for international trips and always brings his Chime card to avoid foreign transaction fees.
Does Discover® have foreign transaction fees?
There is no Discover foreign transaction fee for credit cards. You’ll pay no foreign ATM surcharges when using your Discover credit card or debit card to withdraw cash.14
Does Chase Freedom® have foreign transaction fees?
Chase Freedom credit cards do have a foreign transaction fee. The Chase foreign transaction fee for all Freedom credit cards, including Chase Freedom Unlimited®, Chase Freedom Flex®, and Chase Freedom® Student, is 3% of the transaction amount.7
Does American Express® have foreign transaction fees?
American Express does charge foreign transaction fees for some of its personal and business credit cards. The fee is 2.7%, though again, it’s possible to find no transaction fee credit card options offered by American Express.3
Does Capital One® have foreign transaction fees?
Capital One does not charge foreign transaction fees for its personal credit cards.6
Which cards have no foreign transaction fees?
There are several credit cards with no foreign transaction fees. Some options include Capital One credit cards, Discover credit cards, and the Chime Credit Builder card, which allows you to build credit as you spend with no annual fees.15