What Are Foreign Transaction Fees?

Airline tickets, checked bag fees, hotel bookings, outrageous rental car prices — these are the vacation costs you’ve probably budgeted for. But when you travel abroad, you may also need to plan for foreign transaction fees every time you swipe your card.

Some debit and credit card issuers offer cards without any foreign transaction fees, but if you don’t have one of these in your wallet, you could spend upwards of 4% of the total transaction price each time you buy a cup of gelato, purchase a ticket to a museum or swipe your card to use the train system.

Not keen on throwing away your vacation budget on fees that add no value to your travel experience? We’ll cover how foreign transaction fees work, how much they cost and, most importantly, how to avoid foreign transaction fees altogether.

What Is a Foreign Transaction Fee?

A foreign transaction fee is a surcharge assessed by a bank or credit card issuer when you make a purchase in a country outside of the United States. Not every bank and credit card issuer charges a foreign transaction fee, so it’s a good idea to research such fees before opening an account or credit card.

While we typically think about foreign transaction fees being assessed when we’re traveling abroad, you may also pay a foreign transaction fee when shopping online with an international vendor. In fact, any time your purchase is routed through a foreign bank, a foreign transaction fees may apply.

How Much Do Foreign Transaction Fees Cost?

Foreign transaction fees generally cost between 1% and 4% of the transaction. For example, if you charge $100 on your credit card in a foreign country, you’ll pay the $100 that is owed to the merchant, but you might also pay $1 to $4 extra in foreign transaction fees, depending on the rate assessed by your bank or credit card issuer.

Not sure how your credit or debit card issuer calculates foreign transaction fees? Head to the website or pull out your paperwork from when…

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