Many people rely on their credit cards when it comes to traveling abroad. After all, it eases their mind knowing they do not have the chance to lose actual cash on the streets. Plus, carrying credit cards make big-ticket purchases easy.
However, what most users do not know is that their cards carry certain credit card fees. One of these fees is the highly unwanted foreign currency transaction fee usually levied on transactions.
If you are going on a trip anytime soon and are interested in bringing a credit card with you, make sure to check out how to avoid these transaction fees. Take a look at the guide below.
What Is a Foreign Currency Transaction Fee?
A foreign currency transaction fee is a type of charge usually levied by a bank or financial institution to its customer who chooses to make a payment or transaction using a foreign currency.
These types of transaction fees typically occur when cardholders use their cards to purchase items while they are traveling abroad.
However, this can also apply to cardholders who make purchases online from a merchant whose primary currency is foreign. Apart from these aforementioned circumstances, withdrawing money from foreign ATMs can also incur charges.
Charges imposed on users range from around 3% of each transaction. This can include a 1% charge from the payment processor as well as an additional 2% charge from the bank itself.
How to Watch Out for Foreign Fees When Choosing a Card
Foreign transaction fees are an essential aspect you should take note of, particularly when purchasing items overseas or using your card outside the country.
While charges may seem small compared to the overall price, this can add up over time and bear heavy loads on your finances. Below are some ways you watch out for this.
Search for Cards Without Fees
Take your time in carefully reviewing the credit card offerings in the market. More often than not, some financial institutions or lenders offer low foreign fees, or better yet, no foreign transaction fees at all.
There are many credit cards that do not charge this, so make sure to consider opening one up prior to going on an international trip. Some of the banks that have already foregone these types of fees are Capital One and Discover.
Besides this, most credit cards that have this unique offering also bundle the lack of these credit card fees to other key features and benefits, such as access to airport lounges, Priority Pass Select membership, and other travel-related perks.
Make sure to consider other aspects as well so that you can enjoy what these types of cards have to offer.
Review the Terms and Conditions
More importantly than applying for a credit card without foreign fees is thoroughly reading between the lines. This means poring over the terms and conditions page of your credit card or reading the credit card agreement well.
Doing this encourages you not only to gauge whether you will be charged with a foreign currency transaction fee after the introductory period but also to know if there are certain fees outside of the institution you currently bank with.
Some of the charges you have to look for are foreign conversion fees or even ATM withdrawals, so do take note of these when reading through the disclosure. Better yet, ask the bank directly about these fees.
The Bottom Line
Having a credit card that does not come with a foreign currency transaction fee will certainly make your international transactions less expensive.
With the above methods, you can watch out for foreign fees when looking for a reliable credit card.
