foreign transaction feesPlanning on embarking on a global adventure soon? If so, you may be thinking about how you’re going to be paying for food and souvenirs when you’re abroad. A credit card can be a great way to foot those expenses, but before you start swiping your card during your travels, you’ll want to be aware of the foreign transaction fees associated with the card and their implications first. That’s because this type of fee could affect how much you’re spending when you’re making purchases overseas — or even when you’re buying a box of face masks through a non-U.S. retailer’s website from home. To find out what you need to know about foreign transaction fees and how to avoid them, keep reading.

What is a foreign transaction fee?

Simply put, a credit card foreign transaction fee is a type of charge that is made under the following circumstances:

  • Each time you use the credit card to buy something through a non-U.S. retailer
  • When a transaction is processed by a non-U.S. retailer
  • When a transaction is processed by an overseas bank

These fees usually range from 3% to 5% of every transaction. If the credit card that you’re using does have such a fee, you’ll be charged every time you use it to make purchases overseas and every time your charges are processed overseas. So, if you use your credit card to buy Eiffel Tower T-shirts in France or on a France-based website, you’ll have to fork up any foreign transaction fees that come with your credit card. Your credit card issuer assesses this charge, which means it will show up on your credit card statement.

How can you avoid paying foreign transaction fees?

Luckily, if you like to travel or regularly make purchases through non-U.S. retailers, it’s possible for you to avoid foreign transaction fees with the right credit card. That’s because not all cards charge foreign transaction fees. In fact, many of our recommended travel credit cards, like the Capital One Venture Rewards Credit Card and the Barclaycard Arrival Plus World Elite Mastercard, charge no foreign transaction fees. Since travel rewards credit cards are made for travelers, it’s really no surprise that most come with no foreign transaction fees, but what about other credit cards?

If you don’t think a travel credit card would best fit your needs, there are also other types of cards without foreign transaction fees that let you earn big rewards. Discover it Cash Back, for example, charges no foreign transaction fees and no annual fee, and it allows you to earn 5% cash back on purchases within select categories each quarter you activate (up to the quarterly maximum, currently $1,500, then it’s 1%) and 1% on all other purchases.

If that isn’t quite your cup of tea, the Capital One Savor Cash Rewards Credit Card might be a better option for you. In addition to giving you the opportunity to earn a $500 cash back bonus after you spend $3,000 on purchases within 3 months from account opening, cardholders can also earn an unlimited 4% back on dining and entertainment (e.g., live theater, amusement parks, zoos, movie theaters and more), 2% back at grocery stores and 1% back on all other purchases. Along with no foreign transaction fees, the Capital One Savor Cash Rewards Credit Card has no annual fee for the first year (then it’s $95).

It should be noted that while the previously mentioned cash back credit cards charge no foreign transaction fees, most cash back credit cards come with the fees. As such, if low or no foreign transaction fees are important to you, be sure to check the card’s Schumer Box before you apply to determine if it’s a fit for you — note that our reviews also detail this information.

As you can see, many credit cards allow you to avoid foreign transaction fees, which means you don’t have to worry about surprise bills when you return from your next overseas vacation. Follow our credit cards blog to learn about how to manage your credit and check our credit cards reviews to find the best card for your needs and spending habits.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.