How can I avoid foreign transaction fees on my credit card?
Whenever I travel abroad, I carry at least one credit card that doesn’t charge foreign transaction fees (FTFs) — the surcharges issuers often levy to cover the additional cost of processing international purchases.
The typical foreign transaction fee adds up to 2% or 3% of the total transaction amount on credit cards, depending on the issuer and the currency in which the transaction is denominated.
On debit card transactions, the standard fee is 1%. That doesn’t include potentially hefty withdrawal fees charged by foreign ATMs.
And if the buyer chooses to denominate a transaction in their home currency, it results in dynamic currency conversion fees, which can be even higher — north of 5% of the transaction value in some cases.
The Case for Credit Cards Without Foreign Transaction Fees
I haven’t kept a precise tally of how much I’ve saved by using credit cards that waive foreign transaction fees, but it’s definitely a three-digit number.
Using credit cards without foreign transaction fees helped me save money on international travel for many years. But traveling abroad isn’t the only situation where FTF-free cards prove useful.
If you’ve ever made a purchase with an international vendor that processed the transaction outside the United States, for example, there’s a good chance you paid a foreign transaction fee.
Such transactions include obvious ones like buying an airline ticket between two non-U.S. destinations or a hotel booking made directly with a property abroad. They also include less-conspicuous ones, such as buying a hard-to-find book from an Amazon retailer based in the United Kingdom.
There’s some good news in all this. Finding credit cards without foreign transaction fees is easier than it used to be due to growing consumer awareness of the issue and fierce competition between travel rewards credit card issuers.
It gets better. Some credit card issuers — notably, Capital One — make a point of waiving foreign transaction fees entirely on all cards.
And, in many cases, consumers willing to do some extra work can reduce or waive foreign transaction fees, even without truly FTF-free cards to their name.
Tips to Reduce, Avoid, or Waive Foreign Transaction Fees
Follow these tips to find credit cards (and bank- or credit union-issued debit cards) without foreign transaction fees — and to reduce, avoid, or waive FTFs and currency exchange fees when you do have to use a card that charges them.
1. Look for Cards Marketed to Frequent Travelers — Even If You’re Not One
The best way to avoid foreign transaction fees entirely is to use credit cards that don’t charge them.
Many if not most credit cards fitting this description can be broadly categorized as travel rewards cards — that is, cards marketed to frequent travelers. This includes cards like the Chase Sapphire Preferred® Card or the Capital One Venture® Rewards card.
You don’t have to be a frequent traveler to qualify for a travel rewards credit card, of course.
And, in the wake of the COVID-19 pandemic, some issuers have added new perks, rewards, and benefits to travel cards in a collective effort to shore up sagging application rates. These perks may or may not last forever, but they’re worth exploring nevertheless.
2. Always Denominate Transactions in Local Currency
This should be the default option wherever you go. Often, you won’t even have the option to denominate overseas transactions in anything but the local currency.
If you’re given the choice to denominate a transaction in U.S. dollars, don’t take it. Doing so will expose you to dynamic currency conversion fees, which can top 5%.
That’s significantly more than the typical foreign transaction fee — which you’ll also pay if your card charges one. The temptation to see what you’re paying in a familiar currency on the spot simply isn’t worth the extra cost.
Wait a few business days, then check your online credit card statement, where the transaction value should appear in U.S. dollars.
3. Switch Banks or Open a Secondary Account That Doesn’t Charge Foreign Transaction Fees
If you’re otherwise happy with your bank but don’t want to be on the hook for foreign transaction fees on debit or credit card purchases and ATM withdrawals, is switching institutions really called for?
Maybe not a wholesale switch — that is, withdrawing every last penny and closing your accounts. But opening a secondary account with a financial institution that doesn’t charge foreign transaction fees might be worth the effort.
Among bigger banks, Capital One and Charles Schwab stand out for waiving foreign transaction fees on debit card transactions.
Credit unions tend to charge lower fees in general, although many have membership requirements that shut out many would-be applicants.
For example, Pentagon Federal Credit Union (PenFed) waives foreign transaction fees entirely, but its ranks have historically been limited to applicants with some connection to the military or military-adjacent civilian service.
4. Withdraw Cash at an International ATM in Your Bank’s Network
Cash remains king in many parts of the world — including places otherwise reputed for technological advances, like Japan.
Accustomed to card-happy jurisdictions like the European Union, my wife and I were a little alarmed by what we found on our first journey to Thailand: a land where few independent merchants seemed to accept plastic. (Our hotel accepted Visa and Mastercard, fortunately.)
Finding an ATM wasn’t difficult, as one would expect in a cash-rich country, but extracting cash proved costly. Because we hadn’t notified our primary bank that we’d be traveling, our ATM card didn’t work. It forced us to use one of our credit cards’ cash advance lines. With cash advance and currency exchange fees, the cost came to well over 5% of the withdrawal.
Had we planned ahead, we probably could have avoided that expense. Most banks and credit unions belong to international ATM networks that, if not entirely fee-free, are much cheaper for U.S.-based travelers to use.
For example, Bank of America belongs to the Global ATM Alliance, a vast network of low-fee ATMs in Europe, Oceania, and parts of Asia. Currency conversion fees may still apply at Global ATM Alliance machines, but hefty international out-of-network transaction fees — $5 for Bank of America customers — don’t.
5. Withdraw Cash in Person at a Partner Bank
If you’re not concerned about a possible language barrier, skip the ATM and withdraw funds directly from a branch teller.
This eliminates unavoidable ATM fees, if any, from the equation and has the added advantage of a face-to-face transaction where you can ask questions about any fees and surcharges.
Before leaving home, check your bank’s website for a list of partner institutions in your destination country and make it a priority to visit when you arrive. Some partner institutions might have branches in your arrival airport — no doubt a welcome convenience after a long journey.
6. Avoid Airport Currency Exchange Kiosks and Independent Currency Exchange Shops
On the subject of airports: The only cash dispensaries you should patronize in the terminal are in-network ATMs and partner bank branches, if any.
Avoid currency exchange kiosks like the plague, unless you want to pay 5% to 8% of your transaction in currency exchange fees.
Likewise, after leaving the airport, avoid independent shops that exchange currency. Their markups are similarly extortionate, and as long as you’re in a decent-sized city, you’ll probably find a lower-cost ATM or bank branch nearby.
If you plan to venture to more remote parts of your destination country and don’t expect to be able to use plastic, load up on cash before leaving the city.
7. Use Your Travel Card When Shopping With International Merchants
Closer to home, use your travel credit card or other FTF-free card whenever you shop with merchants that process transactions outside the United States.
To be safe, that’s any merchant based outside the U.S., including sellers on U.S.-based retail websites like Amazon or Etsy, and any merchant that ships its products from a non-U.S. fulfillment location.
Do this even if your credit card rewards program isn’t set up to favor online purchases unless the value of the rewards you’d forgo is greater than the foreign transaction fee — for example, if you’d miss out on rewards worth 4% of the transaction to avoid a 3% foreign transaction fee.
8. Ask for a Foreign Transaction Fee Waiver for Purchases Processed Overseas
As a last resort, ask your card issuer to refund foreign transaction fees levied on purchases processed overseas.
Because it’s not common knowledge that issuers assess FTFs on purchases made in the U.S. but processed abroad, most are willing to cut cardholders some slack — at least the first time around.
This tactic is less likely to work for in-person transactions conducted overseas, a circumstance in which a plea of ignorance is less convincing.
Top Cards With No Foreign Transaction Fees
Our guide to the best cards without foreign transaction fees provides a comprehensive overview of foreign transaction fee-free cards available to U.S. consumers.
Consider this list — featuring top travel and general-spending cards without foreign transaction fees — a briefing sheet to kick off your search.
Any Capital One Credit Card
Capital One credit cards don’t charge foreign transaction fees, period.
Capital One cardholders, like all credit card users, may be obligated to pay for dynamic currency conversion when they choose to denote foreign transactions in their home currency.
For frequent travelers, the Capital One universe’s clear winner is the Capital One® Venture® Rewards Credit Card, which earns unlimited 2 miles per $1 spent on all eligible purchases — an effective 2% rate of return when redeemed for travel.
The other Capital One standout is the Capital One Quicksilver Cash Rewards Credit Card, a popular cash-back credit card that earns an unlimited 1.5% back on all eligible purchases and does not charge an annual fee.
Chase Sapphire Cards
Chase’s two Sapphire-branded credit cards are among the best travel rewards credit cards on the market today:
- The Chase Sapphire Reserve® Card boasts a $300 annual travel credit, complimentary access to more than 1,000 airport lounges worldwide, potentially valuable perks and benefits at hundreds of hotels worldwide, and a generous rewards program that earns 3 points per $1 spent on eligible dining purchases. Most travel purchases earn 3 points per $1 spent as well, though air travel and hotel and car rental purchases made through Chase Travel earn 5 total points and 10 total points per $1 spent, respectively. Sapphire Reserve has other benefits worth mentioning, both temporary and permanent.
- The Chase Sapphire Preferred® Card is quite generous in its own right, with an impressive sign-up bonus; 5 points per $1 spent on eligible travel purchases made through the Chase Ultimate Rewards portal after the $50 annual Ultimate Rewards hotel credit; 3 points per $1 spent on eligible dining purchases (including dine-in and takeout), select streaming purchases, and online grocery purchases; and 2 points per $1 spent on other eligible travel purchases after the Ultimate Rewards hotel credit; a 10% annual bonus points boost on eligible base point earnings; and much more.
The Platinum Card® From American Express
The Platinum Card® From American Express boasts a $200 annual airline fee credit, up to $200 in annual credits with Uber, complimentary access to more than 1,000 airport lounges worldwide, complimentary elite status with the Hilton Honors and Marriott Bonvoy loyalty programs (Gold and Gold Elite, respectively), and potentially valuable perks and benefits at hundreds of hotels worldwide.
Enrollment is required to enjoy these and other benefits of the Platinum Card from American Express.
For more, see our review of the Platinum Card® From American Express.
Deserve® EDU Student Credit Card
The surprisingly generous Deserve® EDU Mastercard for Students boasts an impressive lineup of perks and benefits:
- A free year of Amazon Prime Student with qualifying spend of at least $500 in purchases in the first three billing cycles
- A $100 credit during the first month of your new Feather furniture subscription
- A $10 statement credit when you pay for three consecutive months of Lemonade insurance coverage
- Cellphone protection up to $600 per claim
- 1% cash back on all eligible purchases
See our Deserve® EDU Student Credit Card review for more information.
Any Discover Credit Card
Like Capital One, Discover is not in the business of charging foreign transaction fees, period.
Historically, this has been cold comfort to Discover loyalists, who’d travel abroad to find their cards declined almost everywhere they tried to use them. Discover, which doesn’t use the dominant Visa or Mastercard payment networks, just couldn’t match the big guns when it came to international acceptance.
Times have changed. Now, Discover cards are accepted in more than 180 countries worldwide, according to Discover. That’s nearly the entire planet outside sub-Saharan Africa, eastern Europe, and the Middle East.
To be sure, Discover’s merchant acceptance rate in Discover-friendly markets still lags Visa and Mastercard. A random merchant in Paris or Tokyo is more likely to accept Visa than Discover.
And Discover’s admirable fraud detection system is more sensitive to international purchases, which is why Discover advises cardholders to notify the issuer of their travel plans before leaving. But the world is no longer closed to Discover users, if it ever was.
Exclusively using credit cards that don’t charge foreign transaction fees is just one of many ways to save money while traveling abroad.
One frugal travel tip that has served me well also involves currency-related calculations: basing my travel plans around foreign exchange rates.
If I’m not able to time my international travel to align with when the U.S. dollar is strong compared to most other currencies, then I’ll consider altering my itinerary to incorporate places where the dollar is comparatively strong. Countries experiencing bouts of economic weakness or (nonviolent) political instability typically have weaker currencies than their prosperous, stable neighbors.
Of course, the best strategy to maximize overseas travel savings is best described as “all of the above.” For the financially adventurous among us, finding novel ways to reduce the total cost of travel without sacrificing comfort or safety is a big perk of the journey, and a profitable one at that.