A foreign transaction fee is a surcharge (typically 1-3% of the transaction amount) applied by credit card issuers when you make a purchase in a foreign currency or through a foreign bank. This fee is separate from any currency conversion fees charged by the payment network (Visa, Mastercard). Many travel-oriented and premium credit cards waive foreign transaction fees, making them ideal for international travel and online purchases from foreign merchants.
Foreign Transaction Fee
Definition
A foreign transaction fee is a surcharge (typically 1-3% of the transaction amount) applied by credit card issuers when you make a purchase in a foreign currency or through a foreign bank. This fee is separate from any currency conversion fees charged by the payment network (Visa, Mastercard). Many travel-oriented and premium credit cards waive foreign transaction fees, making them ideal for international travel and online purchases from foreign merchants.
Example
Using a card with a 3% foreign transaction fee to spend €1,000 (approximately $1,100) on a European vacation would cost an extra $33 in fees. A no-foreign-transaction-fee card would save that amount.
Key Points
- 1Typically 1-3% of foreign currency transactions
- 2Applies to purchases in foreign currencies or through foreign banks
- 3Many travel cards waive this fee
- 4Also applies to online purchases from foreign merchants
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