Yes, you can use your credit card abroad, but fees and foreign exchange rates will add to what you pay
Your credit card will work in most countries, but the cost of using it internationally depends on three things: whether your card charges a foreign transaction fee, what exchange rate the card issuer uses, and whether the merchant or ATM charges its own fee. A card with no foreign transaction fee is cheaper than one with a 3% fee, but even the cheaper option costs more than using a debit card or local currency from home.
Before you leave, contact your card issuer to let them know you are traveling. Many cards now flag international charges as fraud automatically, and a quick call prevents your card from being declined when you need it. Ask specifically whether your card charges a foreign transaction fee — this is the single biggest cost you can control.
Key Takeaways
- Foreign transaction fees range from 0% to 3% depending on your card, and this fee applies to every purchase you make outside the United States.
- Your card issuer sets the exchange rate they use to convert foreign currency to dollars, and this rate is usually worse than the mid-market rate you see online.
- Merchants abroad often offer to charge you in dollars instead of local currency — this almost always costs more and should be declined.
- Notifying your card issuer before you travel prevents your card from being blocked as fraud, and takes five minutes on the phone or through their app.
- ATM withdrawals abroad charge both a foreign transaction fee from your card issuer and a fee from the ATM operator, making them more expensive than using your card at merchants.
How foreign transaction fees work
A foreign transaction fee is a percentage of every purchase you make outside the United States. Most cards charge 1% to 3%, though some cards charge 0%. This fee is added to your bill automatically — you will not see it at the register, but it will appear on your statement.
If you use a card with a 2% foreign transaction fee and spend $100 at a restaurant in London, you pay $102 on your statement. If your card has 0% foreign transaction fee, you pay $100 (though you will still pay the exchange rate markup, explained below). The fee applies whether you are buying a meal, booking a hotel, or withdrawing cash from an ATM.
Some cards marketed to frequent travelers charge 0% foreign transaction fees. These are usually premium cards with annual fees, so the savings only matter if you travel often or spend large amounts abroad. If you travel once every few years, a card with a 1% fee is usually cheaper than paying an annual fee for a card you barely use.
Exchange rates and the markup your card issuer adds
When you spend money in a foreign currency, your card issuer converts it to dollars. They do not use the real exchange rate — the one you see on Google or XE.com — because they add a markup. This markup is usually 1% to 2% on top of the real rate, and it is separate from the foreign transaction fee.
Here is a concrete example. You buy something in euros that costs €100. The real exchange rate (called the mid-market rate) is 1 euro = $1.10, so the true cost is $110. Your card issuer might use a rate of 1 euro = $1.08, which costs you $108. That looks like a savings, but it is actually a 2% markup — they are giving you a worse rate than the real one. You pay $108 plus any foreign transaction fee your card charges.
You cannot negotiate the exchange rate your card issuer uses, and it changes daily. The only way to avoid this markup is to use a debit card or withdraw cash before you travel, but both have their own costs and risks.
Dynamic currency conversion: why you should say no
When you swipe your card at a merchant abroad, you will sometimes see a screen asking whether you want to be charged in dollars or in the local currency. This is called dynamic currency conversion, and choosing dollars almost always costs more.
The merchant or payment processor converts the charge to dollars right there and shows you the total. This conversion uses a terrible exchange rate — often 4% to 10% worse than what your card issuer would use. You pay the merchant's markup plus your card's foreign transaction fee plus your card's exchange rate markup. Always choose to be charged in the local currency instead, and let your card issuer do the conversion.
The only exception is if you are in a country where the local currency is unstable or you are worried about fraud. In those rare cases, the certainty of knowing your dollar cost might be worth the extra fee. For most trips, decline the dollar option.
Notifying your card issuer before you travel
Call your card issuer or use their mobile app to tell them where you are going and when. Most cards now have a travel notification feature in the app that takes 30 seconds. This tells the fraud detection system that charges from that country are legitimate, so your card will not be declined.
If you do not notify them and your card gets blocked, you will be stuck without access to money until you call customer service — which is difficult when you are abroad and may be charged international calling rates. A quick notification before you leave prevents this entirely.
You do not need to ask permission or get anything in writing. The notification is just a heads-up to the fraud team. If you travel to multiple countries, you can add them all at once or add them as you go.
ATM withdrawals abroad cost more than card purchases
Using an ATM to withdraw cash abroad charges you twice: once from your card issuer (the foreign transaction fee) and once from the ATM operator (usually $2 to $5 per withdrawal). A $100 withdrawal might cost you $103 to $105 in fees alone, depending on your card and the ATM.
Using your card to buy things at merchants is cheaper because you only pay your card's foreign transaction fee and exchange rate markup — no ATM operator fee. If you need cash, withdraw larger amounts less often to spread the ATM fee across more money. A $300 withdrawal costs less per dollar than three $100 withdrawals.
Some banks offer fee reimbursement for ATM withdrawals abroad if you have a premium checking account, so check your account terms before you travel. If your bank reimburses ATM fees, withdrawing cash becomes competitive with card purchases.
Comparing your options before you go
| Method | Fees You Pay | When to Use It |
|---|---|---|
| Credit card with 0% foreign transaction fee | Exchange rate markup only (1–2%) | If you have this card and travel often |
| Credit card with 1–3% foreign transaction fee | Foreign transaction fee + exchange rate markup | Most travelers; cheapest option for occasional trips |
| Debit card | Foreign transaction fee + exchange rate markup + ATM fee | Only if your bank reimburses ATM fees abroad |
| Cash exchanged before you travel | Exchange fee at your bank (usually 2–3%) | Small amounts for emergencies; risky to carry large amounts |
| ATM withdrawal abroad | Foreign transaction fee + exchange rate markup + ATM operator fee ($2–$5) | Only if you need cash and your bank reimburses fees |
For most people on a typical trip, a credit card with a 1% to 2% foreign transaction fee is the cheapest and safest option. You avoid carrying large amounts of cash, you have fraud protection, and the total cost is lower than other methods.
What to do if your card is declined abroad
If your card is declined, it is usually because the fraud system flagged the charge, not because something is wrong with your account. Call your card issuer's customer service number — this number is on the back of your card and works from abroad. Tell them where you are and what you were trying to buy. They can usually unblock the charge in minutes.
If you cannot reach customer service or your card stays blocked, use a backup payment method: a second credit card, a debit card, or cash. This is why carrying two cards is safer than relying on one. If you have a travel companion, ask if you can borrow their card temporarily and pay them back later.
Frequently Asked Questions
Do I need a special travel credit card?
No. Any credit card with 0% or 1% foreign transaction fee works fine. Premium travel cards with annual fees only make sense if you travel multiple times per year and the annual fee is less than what you save on foreign transaction fees. For occasional travelers, a regular card with a low foreign transaction fee is cheaper.
What if I lose my card while traveling?
Call your card issuer when ready — the number is on your statement or your bank's website. They will cancel the card and mail a replacement, though it may take a week or more to arrive. Ask if they can issue a temporary card number or send funds to a Western Union location nearby. Having a backup card prevents you from being stranded without money.
Is it safer to use a credit card or cash abroad?
Credit cards are safer because they have fraud protection — if someone uses your card number, you can dispute the charge and get your money back. Cash cannot be recovered if it is stolen. Carry small amounts of cash for emergencies and tips, and use your card for most purchases.
Can I use my credit card in countries that don't use dollars?
Yes. Your card works in any country with merchants that accept Visa, Mastercard, or American Express. The card issuer converts the local currency to dollars automatically. Some very small merchants or rural areas may only accept cash, so ask locals what payment methods work before you arrive.
Will using my card abroad hurt my credit score?
No. Using your card abroad does not affect your credit score. Your score is based on your payment history, how much credit you use, and how long you have had accounts open — not where you use the card. Pay your bill on time when you return home, and your score will not change.