What a foreign transaction fee is and why it matters
A foreign transaction fee is a charge your card issuer adds when you use your credit card outside the United States, or when you buy something from a foreign merchant while in the US. Most cards charge between 1% and 3% of the purchase amount on top of what you pay the merchant. If you spend $100 on a meal in London, a card with a 3% foreign transaction fee costs you an extra $3.
Cards without this fee charge you only the exchange rate the card network (Visa, Mastercard, American Express) sets that day — nothing more. The difference adds up quickly if you travel regularly, shop from international retailers online, or send money abroad.
Key Takeaways
- Most travel rewards cards, premium cards, and some everyday cards have no foreign transaction fees, but you need to check the card's terms before you open it.
- The fee applies to any purchase made outside the US or from a foreign merchant, whether you are traveling or shopping online from home.
- No-fee cards still charge you the exchange rate set by Visa or Mastercard that day, so you are not avoiding currency conversion — only the extra percentage.
- Cards that waive foreign transaction fees often charge an annual fee, so compare the total cost against how much you actually spend abroad.
Types of cards that typically have no foreign transaction fee
Travel rewards cards almost always waive foreign transaction fees because they are designed for people who cross borders. Cards like the Chase Sapphire Preferred, American Express Platinum, and Capital One Venture X all charge zero foreign transaction fees. Many of these cards charge an annual fee ($95 to $550), but the savings on international spending can offset it if you travel or shop internationally several times a year.
Some everyday cash-back cards also waive the fee without charging an annual fee. The Citi Double Cash card and the Capital One Quicksilver have no foreign transaction fee and no annual fee, though they offer lower rewards rates than premium travel cards. A few bank-issued cards, particularly those from credit unions or regional banks, may also waive the fee — you have to check each card's disclosure document.
Business credit cards often include this benefit too, even if they charge an annual fee. If you run a small business and buy from international suppliers or travel for work, a business card with no foreign transaction fee can save hundreds per year.
How to check whether a card has a foreign transaction fee
The card issuer must disclose foreign transaction fees in the Schumer Box — a standardized table on the card's product page or in the terms and conditions. Look for a row labeled "Foreign Transaction Fee" or "International Transaction Fee." If it says "None" or "0%," the card has no fee. If it lists a percentage like "3%," that card charges that amount on every foreign purchase.
Do not rely on marketing language like "travel card" or "no hidden fees." Read the actual terms. You can find these on the card issuer's website, usually near the "explore" button or in a link labeled "Terms and Conditions" or "Pricing Information." If you cannot find it online, call the card issuer's customer service number and ask directly: "Does this card charge a foreign transaction fee?"
If you already have a card and want to know whether it charges the fee, log into your online account or call the number on the back of your card. The fee will also show up on your statement if you have used the card internationally — look for a line item labeled "Foreign Transaction Fee" or a percentage added to the purchase amount.
What you pay when using a no-fee card abroad
A card with no foreign transaction fee does not mean you avoid currency conversion. When you buy something in euros or yen, your card network (Visa, Mastercard, or American Express) converts that amount to US dollars using their exchange rate for that day. You pay that converted amount — nothing more, nothing less.
The exchange rate the card networks use is usually close to the mid-market rate you see on financial websites, though it may be slightly higher or lower depending on the network. You cannot negotiate this rate, and it changes daily. The benefit of a no-fee card is that you pay only this rate, not this rate plus an extra 2% or 3% markup.
Some cards offer additional perks beyond waiving the foreign transaction fee — for example, travel insurance, airport lounge access, or concierge services. These are separate from the fee itself and vary by card. Check the full benefits list when comparing cards.
Annual fees and whether they are worth it
Many cards with no foreign transaction fee charge an annual fee between $95 and $550. Whether that fee makes sense depends on how much you spend internationally and what other benefits the card offers. If you travel abroad twice a year and spend $2,000 each trip, a card with a 2% foreign transaction fee would cost you $80 in fees alone — so a $95 annual fee might still save you money if you also earn rewards on those purchases.
Cards with no annual fee exist, but they usually offer lower rewards rates or fewer travel perks. The Capital One Quicksilver (no annual fee, 1.5% cash back) and Citi Double Cash (no annual fee, 2% cash back) are examples. If you do not travel often or do not spend much internationally, a no-fee card without an annual fee is the better choice.
Calculate your own break-even point: multiply your average annual international spending by the foreign transaction fee percentage of a card you are considering. If that number is higher than the annual fee, the card pays for itself. If it is lower, a no-fee card without an annual fee is cheaper.
How to use a no-fee card when traveling
Once you have a card with no foreign transaction fee, using it is straightforward. Swipe, insert, or tap it at any merchant that accepts your card network (Visa, Mastercard, or American Express). The merchant will either charge you in the local currency or offer to charge you in US dollars — always choose the local currency. When you choose local currency, your card network handles the conversion at their rate. When you choose US dollars, the merchant or their bank does the conversion, and they typically charge a higher rate.
Online shopping from foreign retailers works the same way. Enter your card details at checkout. The merchant will charge you in their local currency, and your card network will convert it to US dollars and post it to your statement a day or two later.
Keep your card issuer informed if you are traveling internationally for an extended period. Many issuers flag unusual activity as fraud, and a quick call or message through your online account can prevent your card from being blocked while you are abroad. Most cards now let you set travel notifications through their mobile app.
Alternatives if you cannot get approved for a no-fee card
If you have limited credit history or a lower credit score, you may not be approved for premium travel cards or even some everyday cards with no foreign transaction fee. In that case, you have a few options. Some issuers offer secured credit cards (where you put down a cash deposit) that have no foreign transaction fee — check the terms before you open one. A few credit unions also offer no-fee cards to members with lower credit requirements.
Another route is to use a debit card or prepaid card that has no foreign transaction fee. Some online banks and fintech companies offer these, though you should check the terms carefully because some prepaid cards charge fees for ATM withdrawals or balance inquiries abroad. A third option is to use a peer-to-peer payment app like Wise (formerly TransferWise) to convert money before you travel, though this works best if you know your spending in advance.
Frequently Asked Questions
Do I pay the foreign transaction fee even if I am in the US and buy from a foreign website?
Yes. The fee applies whenever a foreign merchant processes the charge, regardless of where you are physically located. If you order from a UK retailer's website while sitting at home in Ohio, your card issuer will charge the foreign transaction fee (if your card has one) because the merchant is foreign.
What if my card issuer charges a foreign transaction fee but I dispute a purchase made abroad?
The foreign transaction fee is separate from the purchase amount and is not typically refunded when you dispute the purchase itself. If you dispute a $100 purchase with a 3% fee ($103 total), the issuer will refund the $100 but may keep the $3 fee. Check your card's dispute policy in the terms and conditions.
Can I use a credit card with a foreign transaction fee and then get reimbursed by my employer?
That depends on your employer's policy. Some employers reimburse the full amount including the fee; others reimburse only the base purchase. Ask your finance or HR department before you travel. If you have a choice of cards, using a no-fee card means you have nothing to dispute or explain on your expense report.
Does a no-foreign-transaction-fee card help me avoid currency conversion altogether?
No. Your card network will always convert foreign currency to US dollars. A no-fee card straightforward means you pay the network's exchange rate without an extra percentage markup. You cannot avoid the conversion itself.
Are there credit cards with no foreign transaction fee and no annual fee?
Yes, though they are less common and usually offer lower rewards rates. The Capital One Quicksilver and Citi Double Cash are two examples. Most premium travel cards charge an annual fee because the issuer uses that fee to fund travel perks like lounge access and travel insurance.