Foreign Transaction Fee
A fee charged by credit card companies for transactions in foreign currencies, typically 1-3% of the purchase amount.
What You Need to Know
Foreign transaction fees are hidden costs that credit card companies charge when you use your card abroad or make purchases in foreign currencies online.
How It Works:
- You buy something in euros for €100
- Exchange rate: 1 EUR = 1.10 USD = $110
- Foreign transaction fee (3%): $3.30
- Total charge: $113.30
Typical Fees:
- Standard credit cards: 3%
- Many bank debit cards: 3% + $5 ATM fee
- Cards with no foreign transaction fees: 0%
Cards with No Foreign Transaction Fees:
- Discover (all cards)
- Capital One (most cards)
- Chase Sapphire Preferred
- Bank of America Travel Rewards
Why It Matters: On a $3,000 vacation, a 3% fee costs you $90. Over a lifetime of travel, this adds up to thousands of dollars unnecessarily paid to banks.
The Bottom Line: Always use a credit card with no foreign transaction fees when traveling or shopping internationally. It's free money saved.
Sources & References
This information is sourced from authoritative government and academic institutions:
- consumerfinance.gov
https://www.consumerfinance.gov/ask-cfpb/what-is-a-foreign-transaction-fee-en-1969/
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Exchange Rate
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