Foreign Transaction Fees: Everything You Need to Know

Many years ago, I studied abroad in college and took a credit card with me to cover expenses. Unfortunately, I was shocked and dismayed to see very expensive fees listed on my card statement. I was hit with a 3% foreign transaction fee on every purchase I made outside of the U.S.

Credit card companies and banks commonly charge these fees, which you may have to pay not only when you’re physically making debit or credit card purchases outside the U.S. but also on any transactions in a foreign currency. So, if you're on your computer in the U.S. and order tea from a U.K. website or maple syrup from Canada, you could get hit with foreign transaction fees too.

Let’s look more into how foreign transaction fees work, what the typical cost is, and how you can avoid them.

Key takeaways

• Many credit cards and debit cards charge foreign transaction fees on purchases made outside of the U.S.
• These fees often total between 1% to 3% of the amount of your purchase.
• You can reduce or avoid foreign transaction fees by looking for a bank or card issuer that doesn't charge them or considering other payment or purchase options.
• Many popular travel credit cards don't charge foreign transaction fees and offer additional perks.

What are foreign transaction fees?

Card issuers and banks often charge foreign transaction fees for any credit card or debit card purchase made with merchants outside of the U.S. This can include purchases made while you’re physically traveling or when you’re shopping online through international retailers.

In some cases, you’ll pay two separate fees charged by the:

• Financial institution issuing the debit or credit card, such as Chase or Barclays
• Payment network, such as Visa or Mastercard

Typically, these fees add up to 1% to 3% of the transaction. However, they vary by the card, issuer, and payment network. Plus, not all cards charge them.

How they can add up

While they may not seem expensive, foreign transaction fees can quickly add up. Say you spend the following during a day abroad.

• $150 on a hotel room
• $25 on breakfast
• $50 on an excursion or tour
• $45 for lunch
• $50 on a souvenir
• $75 for dinner

In total, you’ve spent $395 for the day. If you paid a total foreign transaction fee of 3%, you'd pay an additional $11.85 for your purchases. Throughout your vacation, these charges can get very expensive since they’ll increase with your spending.

Comparing other international transaction fees

Foreign transaction fees are just one type of charge you might face when you use your card outside of the U.S. or charge items in a foreign currency. Others could include the following.

• Currency conversion fees: Currency conversion fees may be charged separately from foreign transaction fees or be included in them. Card payment networks and ATMs may charge fees to convert from one currency to another. For example, Mastercard typically charges 1% in foreign conversion fees. Banks could also add a markup, which is a fee added to the exchange rate.
• Dynamic currency conversion fees: Foreign merchants sometimes allow you to pay in U.S. dollars even when you make purchases outside of the U.S. This often leads to higher costs than if you simply make your purchase in the foreign currency and let your card issuer apply its currency conversion fee. That's because merchants often add fees or charge an inflated exchange rate. For example, if $1 was worth $0.95 in a foreign currency, the merchant might only give you $0.85 on the dollar and keep the other $0.10.
• Foreign ATM fees: You might pay various fees when you use your debit card to take cash out of an ATM while you're outside the U.S. They might total a flat dollar amount, such as $1 to $5, be based on a percentage of the transaction, or both. These fees can come from the ATM operator and card issuer.

Visa and Mastercard have online calculators that allow you to check their conversion rates and see how much you'll pay. For example, if you convert $300 to euros using a Visa card, you'd pay a 2% bank fee. There's a 2.25% markup over the European Central Bank rate, so you would end up with around $281 Euros (as of October 16, 2024).

How much are foreign transaction fees?

Card issuers set their own foreign transaction fees, though they must disclose them in the card’s terms and conditions. As mentioned, the fees are usually between 1% and 3% of the transaction amount, but they could be higher.

Check your card's terms and conditions carefully to find out what foreign transaction fees you will have to pay. For example, you can see below in the pricing information for the Chase Freedom Flex^® that you'll pay a 3% fee for transactions outside the U.S.

Foreign transaction fees by major card issuers

Both Visa and Mastercard apply a 1% network fee — or foreign currency conversion fee — regardless of which bank issues your card. There's wide variation in the fees that issuers charge, so it’s worth shopping around for options with the lowest international transaction costs.

Here’s what you can expect to pay with several major card issuers.

Remember that not every card in each company's lineup is necessarily going to have foreign transaction fees.

How to calculate these fees

To calculate foreign transaction fees, you'll need to add the different costs your card’s issuer and network will charge you for using the card abroad. For example, if you use a Mastercard from a bank that charges a 3% fee — like Synchrony — and then Mastercard charges you an additional 1% fee, you would need to factor in both costs.

Here's how you'd calculate your foreign transaction fees on a $100 purchase.

• 3% of $100 for your card issuer’s fee: $3
• 1% of $100 for Mastercard's foreign currency conversion fee: $1

Your total fees could end up being $4 in this scenario. On the other hand, if your card network doesn’t charge a fee, you'd only need to pay the issuer fee of $3.

How to avoid paying foreign transaction fees

The good news is that it’s often possible to avoid paying foreign transaction fees entirely. Here are a few ways to do it.

Choose a debit or credit card without foreign transaction fees

Many credit and debit cards don't charge foreign transaction fees, so research to find one that doesn't. Start by looking at the best travel credit cards, which often advertise no fees for using your card abroad. You can also look for travel-friendly banks. Being wise about which card you use can help avoid incurring avoidable fees that drain your bank account.

Use cash to pay for things

If you pay with cash, your bank or card company obviously can't charge you a fee. You'll need to exchange your local currency for the currency of the country you are traveling to, though, as not all merchants accept payments in U.S. dollars. Both banks and currency exchange stores allow you to exchange your money.

You might be able to get better deals if you exchange your currency at home after shopping around to find out different exchange rates. If you exchange money when traveling, the markups can be higher, and you might end up getting less money than you could have elsewhere.

Pay in your home currency online

Some international merchants have U.S.-based operations and will allow you to pay in U.S. dollars. Shopping through these retailers might help you avoid currency conversion fees.

But if you’re shopping abroad in person and a merchant says you can pay in your home currency, be aware there's often a substantial markup for dynamic currency conversion. Paying in U.S. dollars could actually end up costing you more than paying the fees your card issuer charges for foreign currency transactions.

Research your international purchases and payment decisions

Before you travel abroad or buy from international merchants, always research and understand your payment options.

Find out if your card issuer or the credit card network will charge you a fee for your transaction. Research the different options for currency conversion to find the best exchange rates. Plus, if you're buying from an international merchant online in U.S. dollars, check for any hidden fees.

By taking the time to learn the details, you can avoid surprise fees and added costs like those I faced when I studied abroad years ago.

Our recommendations for credit cards without foreign transaction fees

If you're looking for credit cards with no foreign transaction fees, here are three great options I recommend.

Bank of America^® Travel Rewards credit card

The Bank of America^® Travel Rewards credit card charges no foreign transaction fees and offers the chance to earn 1.5 points per $1 spent on all purchases. You can redeem these points with no blackout dates, and they don't expire. You can use your rewards for travel or dining purchases as well as for statement credits.

There's a $0 annual fee for this card. As a new card member, you could earn 25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases. There’s also a See Terms intro APR for 15 billing cycles for any balance transfers made in the first 60 days on qualifying balance transfers (then See Terms) and a See Terms intro APR on purchases for 15 billing cycles, and then See Terms.

Read more in our Bank of America Travel Rewards credit card review.

Capital One Venture Rewards Credit Card

The Capital One Venture Rewards Credit Card is a popular option because it offers plenty of perks beyond the absence of foreign transaction fees. You could benefit from a new card member bonus that allows you to earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening. Ongoing benefits include 2 miles per dollar on every purchase, every day, 5 miles per dollar on hotels, vacation rentals and rental cars booked through Capital One Travel and 5 miles per dollar on Capital One Entertainment purchases through 12/31/25.

The Capital One Venture Rewards card does charge a $95 annual fee, but its travel-related perks can more than cover that cost over time. These include, among other things, car rental and travel insurance, a $50 experience credit you can use on Lifestyle Collections bookings, and up to a $120 statement credit for Global Entry or TSA PreCheck.

Read more in our Capital One Venture Rewards Credit Card review.

Chase Sapphire Preferred^® Card

Chase Sapphire Preferred^® Card charges no foreign transaction fees and provides many perks, including a $50 Chase Travel hotel credit and 5X rewards on travel purchased through Chase Travel℠. It also offers a welcome offer that allows you to earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.

While you would pay a $95 annual fee, there are ample card member benefits that might more than make up for that cost. For example, you can get a 10% anniversary points bonus and 5X points on travel purchased through Chase Travel℠; 3X points on dining, select streaming services, and online groceries; 2X points on all other travel purchases, and 1X points on all other purchases.

Read more in our Chase Sapphire Preferred Card review.

FAQs

Bottom line

Foreign transaction fees from your card issuer and card network can become very expensive. If you're going abroad or buying from an international merchant, make sure you have a plan to avoid or at least minimize them.

Your strategies could include using cash or, if you want the many benefits credit cards provide, picking a card without foreign transaction fees. You may also find a card that offers other perks for your trip, such as travel credits, travel insurance, and bonus rewards for airline tickets.

Plus, find out which other international transaction fees may apply, including foreign ATM charges and dynamic currency conversion fees, so you avoid surprises that drain your funds.

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Chase Sapphire Preferred^® Card

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Chase Sapphire Preferred^® Card

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Current Offer

Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.

Annual Fee

$95

Rewards Rate

5X points on travel purchased through Chase Travel℠; 3X points on dining, select streaming services, and online groceries; 2X points on all other travel purchases, and 1X points on all other purchases

Benefits and Drawbacks

Benefits

• Generous welcome offer valued at $750 when redeemed via Chase Travel
• High rewards on dining and bookings via Chase Travel
• 25% more value when redeeming points for travel through Chase Travel
• Up to $50 in annual statement credits for hotel stays booked through Chase Travel
• Receive valuable travel protections like trip delay reimbursement and primary rental car insurance

Drawbacks

• Has a $95 annual fee
• Doesn’t offer airport lounge access or premium travel perks like Global Entry or TSA PreCheck credit
• Doesn't offer bonus points on gas or in-person groceries purchases

Card Details

• Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
• Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.
• Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Travel℠. For example, 60,000 points are worth $750 toward travel.
• Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
• Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2027.
• Member FDIC