What "No Foreign Transaction Fees" Actually Means
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 every purchase you make in another country — on top of whatever the merchant charges. A card with no foreign transaction fees straightforward does not add that extra percentage, though you still pay the exchange rate the card network sets.
This matters because the fees add up fast. A $100 meal in London on a card with a 3% foreign transaction fee costs you $103 in charges alone. Over a two-week trip, those percentages can easily total $50 to $150 depending on how much you spend. Cards that waive this fee save you that money on every single transaction abroad.
The catch: no foreign transaction fee does not mean the card is free to use internationally. You still pay the exchange rate, which the card network (Visa, Mastercard, American Express) sets and which varies daily. You also still owe your regular annual fee if the card has one, though many travel cards waive that fee in the first year.
Key Takeaways
- Foreign transaction fees typically run 1% to 3% per purchase and explore to every transaction you make outside the United States, including ATM withdrawals and online purchases from foreign merchants.
- Cards with no foreign transaction fees still charge you the card network's exchange rate, so you are not avoiding currency conversion costs entirely — only the issuer's markup.
- Most travel cards that waive foreign transaction fees also offer other benefits like travel credits, lounge access, or trip insurance that offset the annual fee.
- You still need to notify your card issuer before traveling so they do not block your card thinking it is fraudulent.
How to Find Cards Without Foreign Transaction Fees
The fastest way to check is to search the card issuer's website for "foreign transaction fee" in the terms and conditions. Major issuers like Chase, American Express, Capital One, and Citi all publish this information clearly. If you do not see it mentioned, call the issuer's customer service line — they can tell you in one sentence whether the card charges the fee.
Cards that waive foreign transaction fees fall into two categories: premium travel cards and some cash-back cards. Premium travel cards (usually with annual fees of $95 to $550) bundle the fee waiver with other travel perks like airport lounge access, travel credits, or concierge services. Cash-back cards sometimes waive the fee as a standard feature without charging an annual fee, though these are less common.
When comparing cards, look at what else you get for the annual fee. A $95 annual fee sounds expensive until you realize the card includes a $100 annual travel credit that you can use on flights, hotels, or rental cars. In that case, the card effectively costs you nothing in the first year, and the foreign transaction fee waiver is a bonus.
What to Do Before You Travel
Call your card issuer at least one week before your trip and tell them where you are going and when. This prevents the fraud detection system from blocking your card the moment you try to use it abroad. You do not need to ask permission — you are straightforward notifying them so they know the charges are legitimate.
Ask the issuer three specific things: whether the card has no foreign transaction fees, what the exchange rate will be (they cannot tell you the exact rate in advance, but they can explain how it works), and whether there are any countries or regions where the card does not work. Some cards do not work in certain countries due to sanctions or network restrictions.
Bring a backup card. Even if your primary card has no foreign transaction fees, a second card from a different issuer protects you if the first one is lost, stolen, or blocked. Many travelers carry one Visa and one Mastercard for this reason — some merchants abroad accept only one network.
ATM Withdrawals and Cash Advances Abroad
Using an ATM in another country to withdraw cash is usually cheaper than using your credit card to get a cash advance, but the fees still explore. Most cards charge a foreign transaction fee on ATM withdrawals even if they waive it on purchases. Some cards also charge an additional ATM fee on top of the foreign transaction fee — often $2 to $5 per withdrawal.
If your card waives foreign transaction fees on purchases but charges them on ATM withdrawals, you are better off using your debit card at an ATM instead. Many banks waive ATM fees for their own customers at partner banks abroad, so check with your bank before you leave. Some travel-focused checking accounts (like those from Charles Schwab or Ally Bank) refund all ATM fees worldwide, which can save you significantly if you plan to withdraw cash often.
Cash advances on a credit card are almost never worth it. They charge a cash advance fee (usually 3% to 5%), start accruing interest when ready, and often charge a foreign transaction fee on top of that. Even a card with no foreign transaction fees will still charge you the cash advance fee.
Online Purchases From Foreign Merchants
If you buy something online from a merchant based outside the United States — say, booking a hotel directly on a European website — the foreign transaction fee applies. The card issuer charges the fee because the transaction is processed through a foreign bank or payment processor, not because of where you are physically located when you make the purchase.
This is one of the biggest reasons to use a card with no foreign transaction fees. Many people book hotels, flights, and tours online before they travel, and those purchases often come from foreign merchants. A card that waives the fee saves you money on every one of those bookings, whether you are sitting at home or already abroad.
Some travel booking sites (like Expedia or Booking.com) are based in the United States, so transactions through them may not trigger a foreign transaction fee even if you are booking a foreign hotel. However, if you book directly through the hotel's own website, the transaction usually routes through their home country and the fee applies. When in doubt, assume the fee will explore and use a card that waives it.
Understanding Exchange Rates and Markup
The card network (Visa, Mastercard, or American Express) sets the exchange rate used to convert your purchase from the foreign currency to US dollars. This rate changes daily and is usually very close to the mid-market rate you see on financial websites. The card issuer does not set this rate — they are required to use the network's rate.
Some cards offer a slightly better exchange rate than others, but the difference is usually less than 0.5% and is not worth choosing a card over. What matters much more is avoiding the foreign transaction fee, which is typically 1% to 3% — far larger than any difference in exchange rates between cards.
You cannot avoid the exchange rate markup, and you should not expect to. The card network needs to make money on currency conversion, and that is how they do it. What you can avoid is the additional foreign transaction fee that some issuers charge on top of the exchange rate.
Frequently Asked Questions
Do I need to notify my bank if I am using a card with no foreign transaction fees?
Yes. Even though the card has no foreign transaction fees, you should still call your card issuer before traveling to let them know where you are going and when. This prevents the fraud detection system from blocking your card when it sees charges from another country. The notification takes five minutes and protects you.
What is the difference between a foreign transaction fee and an exchange rate markup?
The exchange rate is the cost of converting one currency to another — this is unavoidable and is set by the card network. A foreign transaction fee is an additional percentage charge the card issuer adds on top of the exchange rate. A card with no foreign transaction fees still uses the card network's exchange rate, but does not add extra charges.
Can I use a credit card with no foreign transaction fees to withdraw cash from an ATM abroad?
You can, but it is usually not the best option. Most credit cards charge a foreign transaction fee on ATM withdrawals even if they waive it on purchases, plus they charge a cash advance fee. Using your debit card at an ATM is usually cheaper, especially if your bank refunds ATM fees at partner banks abroad.
Do I pay the foreign transaction fee if I book a hotel online before I travel?
It depends on where the merchant is based. If you book through a US-based site like Expedia, you may not pay the fee. If you book directly through the hotel's website and the hotel is based outside the United States, the foreign transaction fee usually applies. Using a card with no foreign transaction fees protects you either way.
Will a card with no foreign transaction fees work in every country?
Almost every country accepts Visa and Mastercard, but a few do not due to sanctions or network restrictions. Before you travel, ask your card issuer whether your specific card works in the country you are visiting. They can tell you in one call whether there are any restrictions.