Overseas Transaction Fees: How To Save Using A Credit Card Overseas

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Woman using a credit card while traveling.

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If you plan to use a credit card when traveling abroad, it pays to be conscientious about overseas transaction fees. When you make a purchase on a card in a foreign currency, the issuer may charge a fee – either a flat rate or a percentage of the transaction amount – when the fee is processed outside of the United States. These fees can add up as you pay for airline tickets, hotels and meals.

That said, credit cards make it easy to pay for goods and services in any currency. Instead of having to trade and manage a variety of currencies, card companies handle it all for you. And they usually offer a cheaper exchange rate than a bureau de change at the airport or in the city you are visiting. The trade-off: foreign transaction fees may be charged to you. Here’s everything you need to know about overseas transaction fees and how to avoid them.

What are the foreign transaction fees? How do they work?

Foreign transaction fees are charged when you make a purchase in a currency other than US dollars. You will usually have to pay a fee when you are outside of the United States, but not always. You may be charged a foreign transaction fee if you purchase something online and the transaction is processed in a foreign currency.

Foreign transaction fees typically range between 2% and 5% of the purchase amount (3% is standard). If you use a card abroad to pay for an occasional souvenir, these fees may not be a big deal. But if you’re paying most of the cost of a trip with your credit card, it can add up.

Can I avoid transaction fees abroad?

Yes: Not all credit cards charge an overseas transaction fee. The best way to avoid overseas transaction fees is to get a credit card that doesn’t charge them.

To find out if a credit card charges a foreign transaction fee, go to the card issuer’s website and search for “rates and terms” or “important rates and information.” Foreign transaction fees are typically listed in the “fees” section under the card’s APR disclosures. If there is no mention of foreign transaction fees, your card does not charge any and you can rest easy knowing that your international purchases will not be charged additionally.

If your primary credit card charges overseas transaction fees, you might want to add a card to your wallet that doesn’t, especially if you’re traveling overseas.

Credit cards with no foreign transaction fees

Many travel rewards cards do not charge foreign transaction fees. It is also possible to find credit cards of all types (including secured and refund cards) that do not charge these fees. When shopping for credit cards with no foreign exchange fees, consider the following cards:

American Express

Some American Express cards do not charge a foreign transaction fee. They include:

A capital letter

Capital One Credit Cards have no overseas transaction fees. Some of the most popular cards for traveling include:

  • Capital One Quicksilver Cash Rewards Credit Card
  • Capital One Savor Cash Rewards Credit Card
  • Capital One Spark Miles for businesses
  • Capital One VentureOne Rewards Credit Card
  • Capital One Venture Rewards Credit Card

chase away

Chase offers some of the most popular travel rewards cards with high rewards potential and no overseas transaction fees. They are:

  • Chase Sapphire Preferred® Card
  • Chase Sapphire Reserve®
  • Marriott Bonvoy Boundless® Credit Card

To discover

Although Discover is not widely accepted internationally, the company’s cards do not charge foreign transaction fees. Discover the cards which may be best for travel are:

  • Discover it® Cash Back
  • Discover it® Miles

Faq

Is it better to use cash, debit cards or credit cards abroad?

Many places have readily embraced credit cards and cashless payments, and a credit card can reduce the amount of money you have to carry in the event of theft. But there are countries whose companies still do most of their transactions in cash. Travel to parts of Europe and you may find that many restaurants and small businesses require a minimum amount (usually the equivalent of $ 10 or more) before accepting a credit card. That’s why it’s a good idea to have a debit card on hand as well.

Remember that exchanging money yourself is usually much more expensive and time consuming than withdrawing funds using a debit card. Many money changers charge a fee to exchange your dollars and offer you a less favorable rate. When you use your debit card to withdraw money from a foreign ATM, you benefit from the bank’s wholesale rate, as long as you decline any currency conversions the ATM offers to perform for you.

However, there may be international ATM fees that you should watch out for. Before traveling, check with your bank about the fees you will be charged for withdrawals.

What types of credit cards are accepted internationally?

If you plan to travel internationally more often, some cards are more widely accepted outside the United States than others. The logo of the card you wear when traveling abroad is important, as is the type of card.

Chip credit cards

Magnetic stripe cards that you “swipe” are rarely accepted in most countries in Europe and other parts of the world. Chip or contactless payment technology credit cards are the norm. They are also more secure: a smart card with a PIN code (instead of signing a credit card slip) will significantly reduce your risk of fraud and unauthorized charges.

If you don’t have a smart card yet, contact your card issuer or bank and request one; the majority of card companies have switched to chip and pin or chip and signature credit cards.

To discover

Discover cards do not charge an overseas transaction fee, but they are one of the less widely accepted major credit cards. According to the company interactive card acceptance tool, Discover has yet to make its way to most countries in Africa and the Middle East. Bolivia and Ukraine are other countries where this is not accepted.

Visa and Mastercard

Visa and Mastercard are the two most important payment processors and the most popular cards in the world. Usually, if credit cards are accepted, either will work.

American Express

American Express is the third most commonly accepted card abroad. However, it is generally accepted only by large merchants or companies with an international presence. Small businesses and “family stores” will likely prefer cash, Mastercard, or Visa payments.

For pricing and fees for the American Express Gold Card, click here

For pricing and fees for the American Express Platinum Card, click here

For pricing and fees for the Delta SkyMiles Gold American Express card, click here

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