How to Avoid Foreign Transaction Fees (And Which Cards Charge Them)
That 3% surcharge on every purchase you make abroad adds up faster than most people realize. Here's how to stop paying it — and which credit cards quietly charge it while others don't.
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Category: Educational (Practical Travel Finance)
Cluster: Cluster 2 — Best Travel Credit Cards for 55+
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Meta Title: How to Avoid Foreign Transaction Fees (And Which Cards Charge Them) | WanderWise
Meta Description: Foreign transaction fees add 3% to every purchase you make abroad — costing hundreds per trip. Learn which credit cards charge them, which don't, and how to avoid them entirely.
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You're at a restaurant in Florence. The meal was extraordinary — handmade pasta, a bottle of Brunello, espresso, and a view of the Duomo. The bill comes to €127. You hand over your credit card feeling wonderful.
Three weeks later, back home, you open your credit card statement. The charge isn't $137 (the rough dollar equivalent). It's $141.11. The extra $4 is a 3% foreign transaction fee. Not a big deal on one dinner.
But now multiply that 3% across every purchase on a two-week trip — hotels, restaurants, museums, trains, taxis, shopping, groceries, coffee. On $5,000 in overseas spending, that's $150 in fees. On $8,000 (not unusual for a couple on a longer trip), it's $240.
That money doesn't buy you anything. It doesn't improve your trip. It doesn't earn you points. It's a surcharge that quietly inflates the cost of everything you buy abroad — and it's entirely avoidable if you carry the right card.
What is a foreign transaction fee?
A foreign transaction fee is a surcharge — typically 3% of each purchase — that many credit cards add whenever you make a transaction in a foreign currency or with a merchant located outside the United States.
It actually consists of two components:
- A network assessment fee (about 1%) charged by Visa or Mastercard for processing the currency conversion
- A bank surcharge (about 2%) added by your credit card issuer on top of the network fee
Together, they typically total 3% of the transaction amount, though some cards charge as little as 1% and a few charge nothing at all.
Important clarification: This fee applies even if the transaction is processed in US dollars. If you buy something online from a merchant based in another country, or if a hotel abroad charges your card in USD, the foreign transaction fee may still apply because the merchant's bank is overseas. The fee is triggered by the location of the merchant, not just the currency of the transaction.
Which credit cards charge foreign transaction fees?
This is where most people are surprised. Many popular credit cards — including some that are otherwise excellent for everyday use — charge the full 3% fee on international purchases.
Cards that typically charge foreign transaction fees (3%)
These are broad categories. Always check your specific card's terms, as issuers occasionally update their fee structures.
Most cards from these issuers charge the fee:
- Most Discover cards — Discover cards generally charge a 0% foreign transaction fee (they removed it in recent years), but Discover is accepted at far fewer international merchants than Visa or Mastercard, which creates its own limitation abroad.
- Many bank-specific credit cards — Cards issued by regional banks, credit unions, and store-branded cards (department stores, airline co-brand cards from some issuers) frequently charge the full 3%.
- Most no-annual-fee "basic" cards — If your credit card doesn't have any annual fee and isn't marketed as a travel card, there's a high probability it charges foreign transaction fees.
Specific examples (cards commonly carried that charge the fee):
- Wells Fargo Active Cash (despite being a popular cash-back card)
- Citi Double Cash (the standard version, not the Citi Premier)
- Many store-branded cards (Costco Citi Visa, Amazon Prime Visa in some configurations)
- Older cards that predate the "no foreign transaction fee" trend
How to check your own card: Look at your cardholder agreement (the disclosure you received when you opened the card) or call the number on the back of the card and ask: "Does this card charge a foreign transaction fee?" The customer service representative can tell you in seconds.
Cards that do not charge foreign transaction fees (0%)
Almost every premium travel credit card waives foreign transaction fees entirely. This is one of the most practically valuable features of carrying a travel card — and one of the easiest benefits to understand.
Major travel cards with no foreign transaction fees:
| Card | Annual Fee | Foreign Transaction Fee | Notes |
|---|---|---|---|
| Chase Sapphire Preferred | $95 | None | One of the most popular travel cards in the US |
| Chase Sapphire Reserve | $550 | None | Premium travel card with lounge access and higher earning |
| American Express Platinum | $695 | None | Premium card with extensive travel benefits |
| American Express Gold | $250 | None | Strong dining and grocery earning |
| Capital One Venture | $95 | None | Flat-rate earning, simple to use |
| Capital One Venture X | $395 | None | Premium version with lounge access |
| Capital One VentureOne | $0 | None | No annual fee, lower earning rate |
| Bank of America Travel Rewards | $0 | None | No annual fee, flat-rate earning |
| Chase Freedom Unlimited (when paired with Sapphire) | $0 | None | No fee, but lower base earning rate |
| Hilton Honors Amex cards | Varies ($0–$450) | None | Hotel-focused, useful abroad at Hilton properties |
| Marriott Bonvoy Amex cards | Varies ($95–$650) | None | Hotel-focused |
The pattern: If a card is designed for travel, it almost certainly waives foreign transaction fees. If it's designed for cash back or everyday use without a travel focus, it probably charges them. There are exceptions, but this rule holds for the vast majority of cards.
How much foreign transaction fees really cost you
Let's put real numbers on this. Here's what a 3% fee adds to different levels of international spending:
| Total International Spending | 3% Foreign Transaction Fee |
|---|---|
| $2,000 (short trip, one person) | $60 |
| $5,000 (two-week trip, couple) | $150 |
| $8,000 (extended trip, couple) | $240 |
| $12,000 (month-long trip, couple) | $360 |
| $15,000 (extended international travel) | $450 |
For a couple who takes two international trips per year totaling $10,000 to $15,000 in overseas purchases, the annual cost of foreign transaction fees is $300 to $450 — every single year.
Compare that to the $95 annual fee on a card like the Chase Sapphire Preferred or Capital One Venture. The foreign transaction fee savings alone can be three to five times the cost of the card. That's before counting the points, the travel insurance, and every other benefit.
This is why we consider the absence of foreign transaction fees a baseline requirement for any travel credit card, not a premium feature. It's the most straightforward math in credit card rewards: carrying the right card saves you money on every purchase you make outside the country.
How to avoid foreign transaction fees (step by step)
1. Carry a no-foreign-transaction-fee credit card for all international purchases
This is the single most important step. Before any international trip, make sure you have at least one credit card in your wallet that doesn't charge the fee. Use that card for every purchase abroad — restaurants, transportation, hotels, shopping, everything.
If you don't currently have one, getting a card before your next international trip is worth the effort. Many travel cards can be approved and received within 7 to 14 business days. For help choosing one based on your spending patterns, our guide to the best travel credit cards or the Travel Score Quiz can point you in the right direction.
2. Pay in the local currency (always)
When you use a credit card abroad, merchants sometimes offer to charge you in US dollars instead of the local currency. This is called Dynamic Currency Conversion (DCC), and it's presented as a convenience — "Would you like to pay in dollars?"
Always say no. Always choose to pay in the local currency.
Here's why: when you accept DCC, the merchant (or their payment processor) sets the exchange rate — and it's almost always worse than the rate your credit card network (Visa or Mastercard) would use. The difference can add 3% to 7% on top of the purchase price, even if your card doesn't charge a foreign transaction fee.
This is one of the most common — and costly — mistakes international travelers make. The merchant's offer sounds helpful. It isn't. Your credit card company will convert the local currency to dollars at the network exchange rate, which is consistently close to the real interbank rate. That's the rate you want.
The rule is simple: When the payment terminal or the waiter asks which currency you'd like, always choose the local currency. Euros in Europe. Pounds in the UK. Yen in Japan. Pesos in Mexico. Let your credit card handle the conversion.
3. Notify your credit card company before you travel
While this doesn't directly relate to fees, it prevents a different problem: having your card declined abroad because the issuer flags unexpected foreign transactions as potential fraud.
Most card issuers allow you to set a travel notification through their app or website. It takes two minutes and saves the frustration of standing at a restaurant counter in Paris while your card is repeatedly declined.
Some modern issuers (Capital One, for example) no longer require travel notifications and instead use other fraud-detection methods. Check with your issuer before your trip.
4. Bring a backup card (also with no foreign fees)
Cards get lost. Cards get stolen. Cards occasionally stop working for technical reasons. Carrying a second credit card — ideally from a different network (one Visa, one Mastercard, for example) — ensures you're never stranded.
Both cards should be free of foreign transaction fees. If your primary travel card is a Visa, consider a Mastercard backup, or vice versa. In some countries and with some merchants, one network has better acceptance than the other.
5. Use ATMs wisely for cash
Credit cards work for most purchases abroad, but you'll still need some cash — for small vendors, taxis, tips, and markets. When withdrawing cash from foreign ATMs:
- Use a debit card with no foreign ATM fees. Charles Schwab's High Yield Investor Checking Account reimburses all ATM fees worldwide and charges no foreign transaction fees. Fidelity's Cash Management Account offers similar benefits.
- Withdraw larger amounts less frequently rather than small amounts often, since some ATM operators charge a flat fee per transaction.
- Decline the ATM's currency conversion offer (same principle as DCC with credit cards — let your bank handle the conversion).
- Avoid currency exchange kiosks at airports and tourist areas. Their rates are consistently worse than ATM withdrawals or credit card conversions.
A real-world example: two weeks in Portugal
Let's make this concrete. Here's what a couple might spend on a two-week trip to Portugal, and the difference the right credit card makes:
| Expense | Amount (in Euros) | USD Equivalent | With 3% Fee Card | With No-Fee Card |
|---|---|---|---|---|
| Hotels (not prepaid) | €1,800 | $1,944 | $2,002 | $1,944 |
| Restaurants and cafés | €900 | $972 | $1,001 | $972 |
| Train tickets | €200 | $216 | $222 | $216 |
| Museum admissions | €120 | $130 | $134 | $130 |
| Taxis and rideshares | €150 | $162 | $167 | $162 |
| Shopping and souvenirs | €350 | $378 | $389 | $378 |
| Groceries and markets | €180 | $194 | $200 | $194 |
| Total | €3,700 | $3,996 | $4,115 | $3,996 |
Savings with a no-foreign-transaction-fee card: $119 — on a single trip. Take two international trips per year, and you're saving $200 to $300 annually. Over a decade of retirement travel, that's $2,000 to $3,000 — just from carrying the right piece of plastic.
And remember: the no-fee travel card is also earning you points on every one of those purchases. The card that charges you $119 extra? It might be earning you modest cash back — but it's losing more in fees than it's gaining in rewards.
What about debit cards and foreign transaction fees?
Debit cards can also charge foreign transaction fees, and many do — typically 1% to 3%, similar to credit cards. If you use your regular bank debit card at a foreign ATM or for a purchase abroad, check your account agreement for the fee structure.
For ATM cash withdrawals abroad, consider opening an account specifically designed for international use:
- Charles Schwab High Yield Investor Checking — No foreign transaction fees, all ATM fees worldwide reimbursed. Widely considered the best debit card for international travel.
- Fidelity Cash Management Account — Similar benefits, no foreign transaction fees, ATM fee reimbursement.
- Capital One 360 Checking — No foreign transaction fees, though not all ATM fees are reimbursed.
You don't need to switch your primary banking. Simply open one of these accounts, transfer enough cash for ATM withdrawals during your trip, and use it exclusively for foreign cash access.
Frequently asked questions
Do foreign transaction fees apply to online purchases from foreign merchants?
Yes. If you buy something online from a company based outside the United States — even if the price is listed in US dollars — your credit card may charge a foreign transaction fee. This catches people off guard when buying from European retailers, international subscription services, or foreign hotel websites.
Will I be charged a foreign transaction fee in US territories like Puerto Rico or the US Virgin Islands?
No. Purchases in US territories are treated as domestic transactions by US credit card issuers. Foreign transaction fees only apply to transactions with merchants in foreign countries.
Is there any downside to using a travel credit card abroad instead of cash?
In most developed countries, credit cards are widely accepted and often preferred. The exchange rate you receive through your credit card network is typically better than any currency exchange service. The main limitations: very small vendors, outdoor markets, and some transportation (taxis in certain countries) may only accept cash. Carry some local currency for these situations, but use your card as the default.
Can I get foreign transaction fees refunded?
Some issuers will refund foreign transaction fees as a one-time courtesy if you call and ask. But this isn't guaranteed and isn't a reliable strategy. The better approach: carry the right card and avoid the fees entirely.
Do all Visa and Mastercard transactions get the same exchange rate?
Visa and Mastercard each publish their exchange rates, which are very close to the interbank rate (the "real" exchange rate used by banks and financial institutions). You can check the rates at visa.com/support/consumer/travel-support/exchange-rate-calculator.html and mastercard.com/global/en/personal/get-support/convert-currency.html. Both networks offer rates that are significantly better than currency exchange kiosks, hotel front desks, or airport exchange counters.
What if I already booked hotels abroad using a card with foreign transaction fees?
If the hotel was charged to your card in a foreign currency, the fee has likely already been applied. For future bookings, consider prepaying through a US-based booking platform (which processes the charge in USD from a US merchant) or switching to a no-foreign-transaction-fee card for direct bookings. Going forward, carrying the right card eliminates this concern entirely.
Foreign transaction fees are one of the simplest problems in travel finance — and one of the simplest to solve. The right credit card makes them disappear. Every purchase abroad earns points instead of penalties. And over years of international travel, the savings are quietly substantial. Before your next trip, check the card in your wallet. If it charges 3%, it's time for a better one.