The Rundown on Foreign Transaction Fees

When traveling overseas, you can conveniently use your credit card for most goods and services. The tricky part has to do with the extra fees you are charged for making those purchases abroad. Each purchase you make usually comes along with a foreign transaction fee. The foreign transaction fee varies from card to card. You should find out the fee for your card so there are no surprises when you receive your statement. You can find out what the card foreign transaction fee is by reviewing the card terms and conditions. Typically, this fee is between 2% and 5% based on the card.

When it comes to using credit cards abroad it seems to be more complicated these days than it once was. The foreign transaction fee that card issuers charge are made up of a couple different parts. There is a charge from the processing company, like Visa or MasterCard, and there is a charge from your card issuer, like Chase or Bank of America. They each charge their own set fee and the combination of the two makes up the foreign transaction fee. Check out the table below to see a break down of these fees for some of the card issuers. Here is how it works:

    Foreign Transaction Fee: A foreign transaction is a fee that is charged by the payment processor, like Visa or MasterCard to handle the foreign exchange. Typically, the fee is around 1% to 2% depending on the processing company.
  • Issuer Fee: The issuer fee refers to the fee that the bank charges to handle the transaction. This fee is usually between 0% to 3% based on the card issuer.
  • Dynamic Currency Conversion: This is the fee charged by the merchant for accepting your card. This fee often times covers the transaction fees levied by international payment processors.

Card IssuerForeign Currency FeeIssuer FeeDynamic Currency FeeTotal Fee
American Express2%0%0%2%
Bank of America1%2%0-5%3%-8%
Capital One1%-1%0%0%
Chase1%2%0-5%3%-8%
Discover0%0%0%0%

From the table you can see each credit card has it’s own fee when it comes to making purchase abroad, but typically the fee is between 3% and 5%. There are some cards, like Capital One, who do not charge this fee, however, you will find that most cards do charge the fee. This fee is sometime also referred to as a Foreign Transaction Fee, International Transaction Fee, Currency Conversion Fee, or International Conversion Fee.

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