Watch Out For Foreign Transaction Fees When Traveling Abroad | CreditShout

Watch Out For Foreign Transaction Fees When Traveling Abroad

By Kevin / October 31, 2016
Watch Out For Foreign Transaction Fees When Traveling Abroad

With the US dollar seemingly getting stronger by the minute, you may wonder if it is time to travel abroad. One tip, if you plan on shopping with your credit card: watch out for foreign transaction fees.

Even with the stronger dollar, traveling abroad is expensive. With this in mind, you’ll probably want to minimize your expenses as much as possible.

Sure, you can find the cheapest flights, use credit card rewards and so on.

But what you may not realize is that your bill could be several percent higher if you choose the wrong credit card. This is because of foreign transaction fees, which could add several percent to your tally while abroad.

Let’s take a look at how foreign transaction fees work. And find some good travel rewards cards that do not have them. (In this case, not having these fees is a good thing.)

How Foreign Transaction Fees Work

Foreign transaction fees are simple. A set percentage is charged on purchases that you make abroad.

A common rate is 3 percent, but this varies from card to card.

To illustrate how foreign transactions fees add up to affect your total travel expenses, suppose that you take a trip to Italy over the summer. Below is an example of the expenses that you may incur and how much extra you would have to pay with a foreign transaction fee of 1, 2 or 3 percent:


Amount Spent Before Fees

1% Fee

2% Fee

3% Fee

Transportation

$400

$4

$8

$12

Hotel

$1,000

$10

$20

$30

Dining

$400

$4

$8

$12

Sightseeing

$300

$3

$6

$9

Gift Shops

$100

$1

$2

$3

Other

$500

$5

$10

$15

Total

$2,700

$27

$54

$81

As we can see, with a typical credit card that has a 3 percent foreign transaction fee, you’d have to pay an additional $81 just for using the card.

That probably won’t sink you financially, but that is enough to pay a utility bill, put gas in the car for a few weeks or pay down any existing card balances.

Cards With No Foreign Transaction Fees

If foreign transaction fees aren’t your cup of tea, there are some cards out there that contain no such fees. These include the following:

1. Barclaycard Arrival Plus® World Elite Mastercard®

Barclaycard Arrival Plus® World Elite Mastercard® has no foreign transaction fees.  Also, it is a good travel rewards card overall.

Sign Up Bonus: If you spend at least $3,000 within the first 90 days, you’ll earn a bonus of 40,000 miles with this card. That is enough to redeem for a $400 travel statement credit.

Also, you’ll earn 2 miles per dollar spent on every purchase. And you will get a 5% miles back bonus for to use toward your next redemption, every time you redeem for travel expenses.

The annual fee is $89, but is waived during the first year. The APRs are comparable with the average APRs on the market.

This card is a good pick for those who value simplicity. The upfront bonus offer is bigger than most other bonuses. Also, with 2 miles per dollar spent on every purchase, you won’t have to wonder if you failed to meet some obscure condition to qualify for the points that you think you should earn.

Importantly, you won’t have to pay foreign transaction fees, which will save you a lot of money when compared to other cards.

2. Capital One® VentureOne® Rewards Credit Card

The Capital One® VentureOne® Rewards Credit Card is another good travel rewards card. It has no foreign transaction fees and no annual fee. 

Sign Up Bonus: If you spend at least $1,000 within the first 3 months, you’ll earn a bonus of 20,000 miles with this card. That is worth $200 in travel.

You’ll also earn 1.25 miles per dollar spent on every purchase. 

This card also is a good pick for those who value simplicity and want to avoid fees. The upfront bonus is easier to earn than most other bonuses. 

Want more examples of travel rewards cards with no foreign transaction fees? Check out our Guide to Top Travel & Airline Cards

The Bottom Line

Foreign transaction fees won’t kill you, but they can add up if you travel abroad frequently.

In other words, if you live in northern Minnesota and take one day-trip each year into Canada, you probably shouldn’t lose sleep over foreign transaction fees.

However, if you often forget which country you are in because you travel so much, give a card like the Chase Sapphire Preferred card strong consideration to cut down on your foreign transaction fees while maintaining a high-quality travel rewards card.

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