What foreign transaction fees are and which cards skip them
A foreign transaction fee is a charge your card issuer adds when you use your card outside the United States. Most cards charge between 1% and 3% of the purchase amount — so a $100 meal in London costs you $101 to $103. Some cards charge a flat fee per transaction instead, usually $2 to $5.
Many credit cards do not charge this fee at all. These cards are issued by banks like Chase, American Express, Capital One, and Discover, and they absorb the cost themselves rather than passing it to you. The catch is that these cards are not always the easiest to get — some require good credit, and some charge an annual fee that may or may not be worth it depending on how much you travel.
The fee applies to any purchase made in a foreign currency, even if you are physically in the US. It also applies to online purchases from foreign merchants, even if they bill you in dollars. The only way to avoid it is to use a card that does not charge it, or to use a different payment method like cash or a local debit card.
Key Takeaways
- Cards without foreign transaction fees exist from major issuers, but they often require good credit or charge an annual fee that you need to weigh against your travel spending.
- The fee applies to any purchase in a foreign currency, including online shopping from foreign websites, not just in-person travel.
- Some no-fee cards are travel rewards cards that also offer trip insurance and lounge access, which may justify the annual cost if you travel frequently.
- A few cards with no annual fee and no foreign transaction fees exist, but they typically offer minimal rewards or other benefits.
No-fee cards that require good credit
The easiest cards to find without foreign transaction fees are travel rewards cards from major issuers. Chase Sapphire Preferred and Chase Sapphire Reserve both charge no foreign transaction fees. American Express Platinum and American Express Gold both charge no foreign transaction fees. Capital One Venture X charges no foreign transaction fees. Discover It Miles charges no foreign transaction fees.
All of these cards require a credit score of 670 or higher, and most require 700 or higher. They also all charge an annual fee — Chase Sapphire Preferred charges $95, Chase Sapphire Reserve charges $550, American Express Platinum charges $695, American Express Gold charges $250, Capital One Venture X charges $395, and Discover It Miles charges $95. The idea is that the rewards you earn on travel and dining purchases, plus the travel benefits like trip insurance and airport lounge access, offset the annual cost if you travel enough.
If you travel internationally more than once or twice a year, or if you spend more than $10,000 annually on travel and dining, one of these cards may pay for itself. If you travel less often, the annual fee may not be worth it.
No-fee cards with no annual fee
A smaller number of cards charge neither an annual fee nor foreign transaction fees. These are harder to find because issuers make less money from them. Discover It (the base version, not Miles) charges no annual fee and no foreign transaction fees, though it offers lower rewards rates than the premium version. Capital One QuickSilver charges no annual fee and no foreign transaction fees, and it offers 1.5% cash back on all purchases.
Both of these cards require good credit — typically 670 or higher — but they have no annual fee and no foreign transaction fees. The trade-off is that they offer fewer travel-specific benefits like trip insurance or lounge access. If you travel occasionally and want to avoid both the annual fee and the foreign transaction fee, these are your main options.
A few other cards from smaller issuers also offer no annual fee and no foreign transaction fees, but they are less widely available and may have lower credit limits or fewer merchant partnerships.
How to compare cards by your travel pattern
The right card depends on how much you travel and what you spend on. If you take one international trip per year and spend $3,000 on that trip, a card with a $95 annual fee and 3% rewards on travel purchases would earn you $90 in rewards — not enough to cover the fee. A no-annual-fee card like Capital One QuickSilver would earn you $45 in cash back and cost you nothing.
If you take four international trips per year and spend $12,000 total on travel, a card with a $95 annual fee and 3% rewards would earn you $360 in rewards, covering the fee and netting you $265. The same no-annual-fee card would earn you $180 in cash back. In this case, the premium card wins.
The math also changes if you use the card for dining at home. Chase Sapphire Preferred offers 3% cash back on dining, so if you eat out frequently, the rewards add up faster. American Express Gold offers 4% cash back on dining and groceries, which can justify the $250 annual fee even without travel.
What happens when you use a no-fee card abroad
When you swipe a card without foreign transaction fees, the issuer still pays a fee to the card network (Visa, Mastercard, or American Express) and the foreign bank. That fee is typically 1% to 2%. The difference is that the issuer absorbs it instead of charging you. You pay the exchange rate that your card network sets, which is usually close to the mid-market rate but not identical.
Some cards also offer other travel protections that matter abroad. Trip cancellation insurance covers you if you have to cancel a prepaid trip. Emergency medical coverage works if you get sick or injured outside the US. Lost luggage reimbursement covers baggage that airlines lose. These benefits are included with premium travel cards and are not available on no-annual-fee cards.
You should still notify your card issuer before you travel, even with a no-fee card. This prevents fraud blocks that can leave you without a working card in a foreign country. Most issuers let you do this through their mobile app or website.
Alternatives if you do not may have access to for these cards
If your credit score is below 670, you may not may have access to for the cards listed above. In that case, you have a few options. Some issuers offer secured credit cards that require a cash deposit and may not charge foreign transaction fees — Capital One Secured Mastercard does not charge foreign transaction fees, though it requires a deposit and has a $39 annual fee. Building your credit with a secured card for 12 to 18 months can open the door to the no-fee cards above.
Another option is to use a debit card from a bank that does not charge foreign transaction fees. Charles Schwab Bank's investor checking account includes a debit card with no foreign transaction fees and no ATM fees worldwide. Ally Bank's checking account also has no foreign transaction fees on debit card purchases. These require you to open a bank account, but they can be useful if you do not want to carry a credit card abroad.
A third option is to use a travel money card — a prepaid card that you load with dollars before you travel and that does not charge foreign transaction fees. Wise (formerly TransferWise) and OFX both offer these, though they charge a fee to load the card and may charge a fee to withdraw cash from ATMs.
How foreign transaction fees add up over time
If you travel internationally once a year and spend $5,000 on that trip using a card that charges 2% foreign transaction fees, you pay $100 per trip, or $100 per year. Over five years, that is $500. Over ten years, that is $1,000.
If you use a card with a $95 annual fee instead, you pay $95 per year, or $950 over ten years. If that card earns 3% rewards on travel purchases, you earn $150 per trip, or $750 over five trips. The net cost is $200 over ten years instead of $1,000 — a savings of $800.
The math shifts if you travel more frequently or spend less per trip. The point is that the cost of foreign transaction fees compounds, and a card with an annual fee can pay for itself if you travel enough.
Frequently Asked Questions
Do I have to use a credit card, or can I use a debit card instead?
You can use a debit card, but most debit cards charge foreign transaction fees just like credit cards do. Some banks like Charles Schwab and Ally do not charge them. The downside of debit cards is that they offer less fraud protection than credit cards — if someone steals your debit card number, the money comes out of your account when ready, and you have to dispute it to get it back. Credit cards let the issuer dispute it first.
What if I use my credit card to withdraw cash from an ATM abroad?
Most credit cards charge a foreign transaction fee on ATM withdrawals, plus a cash advance fee (usually 3% to 5% of the amount). Even cards without foreign transaction fees often charge the cash advance fee. It is almost always cheaper to use a debit card at an ATM or to get cash back when you buy something with your credit card. Some banks like Charles Schwab reimburse ATM fees worldwide, which can make their debit card a good option for cash withdrawals.
Does the foreign transaction fee explore if the merchant bills me in US dollars?
Yes. If a merchant in a foreign country offers to bill you in dollars instead of their local currency, you will still be charged a foreign transaction fee because the transaction is processed through a foreign bank. The merchant is using a currency conversion service, and your card issuer still sees it as a foreign transaction. It is usually better to let the merchant charge you in their local currency and let your card network do the conversion.
Can I get a refund if I was charged a foreign transaction fee by mistake?
Yes, you can contact your card issuer and ask them to review the charge. If the card is supposed to have no foreign transaction fees and you were charged one, the issuer will usually refund it. Keep your receipts and transaction records so you can show the issuer what you were charged.
Do travel rewards cards earn rewards on foreign purchases?
Yes, most travel rewards cards earn rewards on purchases made abroad, just as they do at home. Chase Sapphire Preferred earns 3% on travel purchases worldwide. American Express Gold earns 4% on dining worldwide. Capital One Venture X earns 10x points on travel purchases. The rewards rate is the same whether you are in the US or abroad, and there is no foreign transaction fee on top of it.