You've returned from vacation abroad, only to discover that your credit card statement includes charges you've never seen before: foreign transaction fees. These fees can also pop up when you make a purchase with a merchant that routes your payment through a bank outside of the US. Foreign transaction fees (aka international transaction fees) can vary depending on your credit issuer or bank and the total purchase amount. Here are some things to consider when using your credit card abroad, and how you can avoid foreign transaction fees when making international purchases.
Why did I get charged a foreign transaction fee?
You could be charged a foreign transaction fee when you purchase something in a non-US currency, either online or when you're visiting another country.
If you are charged this fee, you can find it listed on your credit card statement on the next billing cycle, either in the fees section or as a separate line item in your recent transactions.
How much is a foreign transaction fee?
The rate for foreign transaction fees is usually 2-5% of the entire purchase, which might include shipping costs and taxes. Check out your cardmember agreement for details on fees for international purchases.
How can I avoid foreign transaction fees?
Some credit cards (like travel cards) don't charge foreign transaction fees, as part of the cardmember perks and benefits package. Some credit cards also waive foreign transaction fees for the first year as a promotional offering.
You can also avoid foreign transaction fees by making purchases online only with international merchants that work with American credit cards and accept US dollars. When shopping online, make sure that their business is based in the US or that they accept a range of payment options that include US currency.
What if I need to use my credit card while abroad?
Before traveling abroad, contact your credit card company to find out if your card charges foreign transaction fees. If you are traveling abroad and using your card, you should review your credit card monthly statement to keep track of any incurred fees. Many credit cards waive foreign transaction fees during your first year as a perk but you might incur these fees once the promotional period ends. In order to avoid paying extra fees when purchasing from international merchants online or while traveling abroad, you may want to look into using a travel credit card that does not charge foreign transaction fees or shopping through merchants that accept the US currency.
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