A foreign transaction fee is a fee that a bank charges when you use your card outside of your home country. But you can be charged a foreign transaction fee at home if you make online purchases with a merchant that processes your transaction outside the United States. Foreign transaction fees typically range from 0% to 3% of the amount of the charge.
When do you get charged a foreign transaction fee?
Any time you make a purchase outside the country where your car was issued, you’ll be charged a foreign transaction fee if your card charges one. This includes purchases made online with merchants based abroad. (I found this out the hard way when I used a rewards card to license some software for a project from a company in Germany.)
Some merchants will offer you the option to pay your bill in U.S. dollars. This practice, known as dynamic currency conversion, isn’t a scam but it is always a bad deal. Dynamic currency conversion almost always offers a (much) worse exchange rate than your bank will give you if you process the charge in local currency. And it won’t get you out of paying a foreign transaction fee. Charges in U.S. dollars made abroad are generally assessed a foreign transaction fee.
Should I use my rewards card that charges a foreign transaction fee abroad?
Most cards that charge a foreign transaction fee charge 3%. (American Express is an outliner; its foreign transaction fee on many cards is 2.7%.) In most cases, you will be better off by using a card that charges no foreign transaction fee when making purchases abroad. A 3% foreign transaction fee would eat up the 3% rewards you might earn in a credit card bonus category. And there are no annual fee credit cards that offer 1.5% rewards on every purchase with no foreign transaction fee.
Which credit cards have no foreign transaction fee?
There are many credit cards that have no foreign transaction fee. Here are a few of our favorites.
Capital One Quicksilver – 1.5% cash back on all purchases with no annual fee.
Before Capital One started aggressively launching travel rewards cards, the bank was well-known for one feature: None of its cards had foreign transaction fees. The same is true today and its Quicksilver Rewards card offers no foreign transaction fee and 1.5% cash back rewards on every purchase for no annual fee.
The Capital One Quicksilver Cash Rewards Credit Card offers no-nonsense cash back rewards on every purchase with no annual fee.
When you make purchases on your Quicksilver card, you’ll earn 1.5% cash back on every purchase with no maximum on the amount of cash back you can earn.
Like all Capital One cards, the Quicksilver Cash Rewards card has no foreign transaction fee. It also offers extended warranty and travel accident insurance.
Learn more and apply for the Capital One Quicksilver Cash Rewards Credit Card. Earn a one-time $200 cash bonus once you spend $500 on purchases within 3 months from account opening.
Capital One Venture X – 2 points per dollar on all purchases and lounge access.
The Capital One Venture X Rewards Credit Card offers access to airport lounges at an affordable price. And with its $395 annual fee, it is one of the most affordable cards offering lounge access.
The card’s rewards structure is simple. It offers two points per dollar on all spending, plus bonuses for booking travel through Capital One Travel. Cardmembers get 10x miles on hotels and car rentals and 5x miles on flights when you book through Capital One Travel. On each cardmember anniversary you’ll also get 10,000 bonus miles.
For the frequent traveler, the Capital One Venture X Rewards Credit Card offers a $300 annual travel credit, good toward bookings with Capital One Travel, plus essential travel protections like trip delay reimbursement, primary auto rental collision damage waiver insurance, and lost luggage reimbursement.
Apply for the Capital One Venture X Card and earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening.
Chase Sapphire Preferred – Excellent travel protections and no foreign transaction fee
The Chase Sapphire Preferred® Card is one of the most popular travel cards that offers no foreign transaction fee and generous rewards on travel.
The Chase Sapphire Preferred® Card is one of Chase’s flagship rewards cards. It offers elevated rewards in useful categories like travel, online grocery, dining, and select streaming services and best-in-class travel insurance protections. The Chase Sapphire Preferred® carries an annual fee of $95.
The card offers rewards of three points per dollar in several categories, including online grocery, select streaming providers, and dining. When you purchase travel through Chase Ultimate Rewards, you’ll earn five points per dollar. All other travel earns two points per dollar. Finally, the card also offers increased rewards for Lyft rides (5x) and Peloton purchases.
The Sapphire Preferred features travel insurance benefits like primary rental car insurance, baggage delay insurance and trip delay reimbursement coverage, making it an excellent choice to use for booking travel. Most importantly, the card offers transfers to Chase’s useful suite of travel partners, plus 25% increased value for your rewards when you redeem them for travel through Chase Ultimate Rewards.
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Our take on the welcome bonuses: This is the standard bonus offered on the Chase Sapphire Preferred card. Chase occasionally increases this offer, so it might be worthwhile to wait if you don’t need this card immediately. An offer with slightly more points is often available in-branch and some people are seeing an additional targeted offer via mail.
The link above is our affiliate link. We always show you the best offer, and this is the best offer we know about on this card.
Card highlights:
Annual fee: $0
Rewards: 5% travel through Chase; 3% dining; 3% drugstore; 1.5% all other purchases