Foreign transaction fees—what are they and how do they work? (2024)

FAQs

Foreign transaction fees—what are they and how do they work? ›

A foreign transaction (FX) fee is a surcharge on your credit card bill that appears when you make a purchase that either passes through a foreign bank or is in a currency other than the U.S. dollar (USD). This fee is charged by many credit card issuers, typically ranging from 1% to 3% of the transaction.

Key takeaways

Foreign transaction fees are surcharges paid by credit card holders on international transactions. These fees typically range from 1 to 3 percent of the total purchase. Although international credit card fees may not seem important in small doses, they can add up over the course of a trip.

June 29, 2024 • 3 min read. By Emily Starbuck Gerson. Quick Answer. A foreign transaction fee is a percentage-based fee on all purchases made in foreign currencies, whether abroad or online. For credit cards that charge a foreign transaction fee, the cost is generally 1% to 3% of the purchase.

Foreign transaction fees usually apply to card purchases made in foreign countries while traveling, but they can also apply to purchases made online from your home country where the vendor is foreign and processes the transaction in its local currency.

Banks rarely refund foreign transaction fees once they have been assessed on legitimate transactions. However, many banks offer credit and debit cards that do not charge foreign transaction fees.

Pay in the local currency

You could potentially avoid any currency conversion fees (when transactions are processed in GBP), and in some cases, get a better exchange rate. Check with your lender about whether there are fees for using your credit card abroad.

How to tell if your credit card has foreign transaction fees? ›

Not all credit cards charge a foreign transaction fee, but many do. To find out if your card does, check the “fees” section of the terms and conditions for your card.

The Visa foreign transaction fee is usually either 0% or 3%, depending on which Visa credit card or debit card you have. The foreign transaction fee is typically 0% for most Visa travel rewards credit cards, which are built for spending all around the world.

Check with the merchant if to confirm if you'll be charged an international transaction fee. The best way to avoid the international transaction fee is to look for debit and credit cards that allow you to shop overseas without being charged international fees.

For example, if you jet off to Europe for a month and charge $5,000 on a card that carries a 3% foreign transaction fee, you'll have to pay an extra $150 when the bill comes due.

A good rule of thumb when traveling is to select the local currency during payment to avoid conversion fees and to use a card that doesn't charge foreign transaction fees. Cash withdrawals from international ATMs are also subject to fees.

A foreign transaction fee is typically calculated by adding the predetermined fee percentage charged by your credit card issuer to a purchase made with a foreign merchant to the cost of the original purchase.

While a foreign transaction fee is charged by your credit card issuer, a currency conversion fee can be charged by the credit card payment processor or the individual merchant.

There may be additional charges from cash machines or banks when you withdraw money abroad or in a foreign currency. Check before you make the transaction.

Foreign transaction fees can add up fast when using your debit card abroad. The fees are often 1% to 3% of the amount of a purchase, and many banks also apply the fee to ATM withdrawals.