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The romance of travel can die quickly when you see your credit card statement. Few of us enjoy being charged to use our own money and when it comes to foreign transaction fees, it’s no different.

What might feel like just a few extra dollars in fees can quickly add up to a hefty end sum. For example, if you charge $2,000 to a credit card with a foreign transaction fee of 3%, that’s an extra $60. For longer vacations or bigger families, these extra charges can be exorbitant.

Likewise, using ATMs abroad can come with a whole range of extra charges.

Luckily, there are some solid strategies you can employ to avoid most of these fees, as well as reduce the ones you do end up paying.

What Is a Foreign Transaction Fee?

Foreign Transaction fee

A foreign transaction fee is assessed by your card issuer every time a foreign (i.e. non-United States) bank processes your card. 

When you use your credit card to make a payment abroad, payment processing networks, such as Visa and Mastercard, typically charge a fee of 1%. Depending on your card issuer, they may pass this fee on to you, as well as add their own fee of about 2%. This means your foreign transaction fee adds up to approximately 3%—the standard fee on most credit cards.

If your card incurs a foreign transaction fee, expect to pay it not only when you’re abroad, but also each time you make a purchase on a non-U.S. website. Whether you’re booking flights with a European airline or reserving a hotel room in Asia, a foreign bank will process your transaction, making you liable to pay a foreign transaction fee—even in the comfort of your own home.

Likewise, just because the transaction is displayed in U.S. dollars, a foreign bank may still be the one processing the transaction, resulting in a foreign transaction fee. Ecuador and Panama, for example, use USD as their official currency, meaning that even though prices will be in USD, there is still a foreign bank processing the transaction in the background.

Keep in mind that a foreign transaction fee is not the same as a currency conversion fee. 

The network fee of 1% charged by Visa and Mastercard is also known as the currency conversion fee, levied each time a conversion is required. That means the currency conversion fee is included in the end foreign transaction fee you pay. It can also be that your card issuer charges a separate currency conversion fee, which will be disclosed in your rates and fees agreement.

How to Avoid Foreign Transaction Fees

A merchant operating the point-of-sale terminal may offer to charge your payment in USD or local currency. Beware: this is a tourist trap that can end up costing you far more than necessary.

This payment option is known as dynamic currency conversion (DCC) and enables you to complete your purchase in your home currency at a guaranteed exchange rate at the time of purchase. 

This may sound good, and that’s the problem. 

Paying in USD abroad won’t prevent you from paying a foreign transaction fee if your card charges one, as a foreign bank is still the one who’s processing the payment. What’s even worse, however, is that the exchange rate offered by the merchant is far less competitive than the going market rate and will be subject to a hefty hidden markup fee.

In addition to DCC, cardholder preferred currency (CPC) is an easy way for foreign merchants to earn commission on foreign transactions.

So when it comes time to complete your purchase, always opt to pay in the local currency.

Avoiding DCC is an important step to saving on unnecessary fees abroad. Yet, your journey to saving on international card transactions begins even before you step in that plane, by applying for a credit card that doesn’t charge foreign transaction fees.

Some card issuers opt to absorb network-levied currency conversion fees, allowing you to spend freely abroad. So the easiest way to avoid foreign transaction fees is by holding non-foreign transaction fees incurring cards.

Cards With No Foreign Transaction Fees

Before jumping into the best cards with no foreign transaction fees, you should keep in mind that not all credit cards are accepted abroad.

While Visa and Mastercard are widespread, Discover and American Express, for instance, are not accepted in many places in the world.

That’s why it’s important to have a mix of credit cards, as well as a debit card and easy access to cash for where card payments aren’t available or come with an exorbitant surcharge.

The Platinum Card® From American Express

One of the ultimate travel rewards credit cards on the market, the Platinum Card® from American Express (see rates and fees) offers the following perks and bonus category rates:

  • Up to $200 hotel credit on prepaid Fine Hotels + Resorts or The Hotel Collection (requires a minimum two-night stay) bookings through American Express Travel 
  • Up to $240 digital entertainment credit, issued in $20 monthly statement credits for eligible purchases on Disney+, The Disney Bundle, ESPN+, Hulu, Peacock and the New York Times (enrollment required)
  • Up to $300 Equinox credit
  • Up to $189 per year in statement credits toward a Clear® Plus membership
  • Up to $200 airline fee credit
  • Up to $200 Uber Cash, issued in increments of $15 per month with a bonus $20 in December
  • 5X points on eligible flights booked with American Express Travel or directly with the airline, on up to $500,000 in charges per calendar year
  • 5X points on eligible prepaid hotel reservations when booked with American Express Travel
  • Marriott Bonvoy Gold and Hilton Honors Gold elite status (enrollment required)
  • Receive either a $100 statement credit every 4 years for a Global Entry application fee or a statement credit up to $85 every 4.5 years for a TSA PreCheck® (through a TSA official enrollment provider) application fee, when charged to your American Express Card. Card Members approved for Global Entry will also receive access to TSA PreCheck at no additional cost.
  • Airport lounge access (Airspace Lounge, The Centurion Lounge, Delta Sky Club, Escape Lounges, Lufthansa Business and Senator Lounges, Plaza Premium, Priority Pass Select)

This is one of the best cards for the frequent traveler as, aside from its numerous benefits, it also incurs zero foreign transaction fees.

The card does come with a large annual fee of $695, but if you use the benefits, you can offset this fee by more than double.

The Platinum Card® from American Express

Earn 80,000 Membership Rewards® points after you spend $8,000 on purchases on your new Card in your first 6 months of Card Membership. Apply and select your preferred metal Card design: classic Platinum Card®, Platinum x Kehinde Wiley, or Platinum x Julie Mehretu.

LEARN MORE

Chase Sapphire Preferred® Card

The Chase Sapphire Preferred® card is an excellent travel rewards card, free of foreign transaction fees. It offers the following perks and earning rates:

  • 3X points on dining, including dining out, eligible delivery and takeout services
  • 3X points on online grocery purchases (this excludes Walmart, Target and wholesale clubs)
  • 2X on other travel purchases
  • 3X points on certain streaming services
  • 1X point on all other purchases
  • Receive up to $50 in statement credits every account anniversary year for hotel stays when purchased through Chase Ultimate Rewards
  • Redeem points at 25% more value (1.25 cents per point) when redeeming for travel through Chase Ultimate Rewards
  • 5X points on travel when purchased through Chase Ultimate Rewards (this excludes hotel purchases that qualify for the $50 Anniversary Hotel Credit)

Chase Ultimate Rewards can also be transferred to 14 different airline and hotel loyalty programs at a ratio of 1:1. 

For an annual fee of $95, the Chase Sapphire Preferred card gives you a massive return value and will save you on purchases made abroad or on foreign websites.

Chase Sapphire Preferred® Card

Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.

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Chase Sapphire Reserve®

The Chase Sapphire Reserve® is the premium Chase travel rewards card.

It offers the following bonus category rates and perks:

  • 5X points on flights when you pay for travel through Chase Ultimate Rewards (only after the first $300 is spent on travel purchases annually)
  • 10X points on hotels and car rentals purchased through Chase Ultimate Rewards (only after the first $300 is spent on travel purchases annually)
  • 3X points on other travel (only after the first $300 is spent on travel purchases annually)
  • 10X points on Chase Dining purchases with Ultimate Rewards
  • 3X points on dining at restaurants, including eligible takeout and delivery services, as well as dining out
  • 1X points on all other purchases
  • Redeem points on travel purchases through the Chase Ultimate Rewards portal for an increased value of 1.5 cents per point
  • Complimentary Priority PassTM Select membership at 1,300+ VIP airport lounges globally
  • Up to $100 Global Entry, TSA PreCheck® or NEXUS fee credit
  • Get access to special benefits when staying with The Luxury Hotel & Resort CollectionSM
  • Travel and protection coverage
  • $300 Annual Travel statement credit

If you can maximize its benefits, you’ll be more than able to offset the annual fee of $550. While you’re doing so, you won’t have to spend a dime on foreign transaction fees.

Chase Sapphire Reserve®

Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. 

LEARN MORE 

Capital One Venture X Rewards Card

The Capital One Venture X Rewards card is a premium travel rewards card with a relatively low annual fee of $395, given what it has on offer.

It comes with the following perks and earning rates:

  • 10X Miles on hotels & rental cars when booked through Capital One Travel
  • 5X Miles on flights when booked through Capital One Travel
  • 2X Miles on all other purchases
  • Unlimited access at up to 1,300+ lounges worldwide from Priority Pass™ and Plaza Premium Group for you and two guests per visit
  • Cell phone coverage up to $800
  • $300 towards travel purchased through Capital One Travel, issued as statement credits
  • A 10,000-mile anniversary bonus, starting on your first anniversary, with an equivalent value of $100 worth of travel
  • $100 credit for Global Entry or TSA PreCheck®

With a $300 annual travel credit, the ability to earn miles on travel purchases, unlimited Priority Pass and Plaza Premium Group airport lounge access, and no foreign transaction fees, the Capital One Venture X Rewards card is top of the range in terms of value for money.

Capital One SavorOne Cash Rewards Card

Don’t be led to believe you need to pay an annual fee to avoid foreign transaction fees. There are a range of $0 annual fee cards on the market which charge zero foreign transaction fees.

The Capital One SavorOne Cash Rewards card is one of them. Here are its perks and earning rates:

  • 10% on Uber & Uber Eats purchases, as well as complimentary Uber One membership statement credits (offer until 11/14/2024)
  • 8% on Capital One Entertainment purchases
  • Unlimited 5% on rental cars and hotels when booked via Capital One Travel
  • 3% on dining and at grocery stores (not including superstores such as Walmart® and Target®)
  • 3% on entertainment and streaming services
  • 1% on all other purchases

This is an excellent cashback travel rewards card that compliments your adventures overseas, while ensuring you won’t have to pay any foreign transaction fees.

How to Avoid ATM Fees

Avoid ATM fees

Travel is full of surprises, and they don’t stop with foreign transaction fees. 

Unfortunately, when using an ATM abroad, there are some additional fees you can expect to run into.

Luckily, there are some strategies to minimize these extra charges.

First, whatever you choose to do abroad, make sure it doesn’t involve using your credit card to withdraw from an ATM. 

When you withdraw cash from an ATM using a credit card, it’s classified as a cash advance. This means you’ll be liable to pay a cash advance fee between three to five percent of the value withdrawn. On top of this, cash advances don’t have grace periods, meaning you’ll begin to accumulate interest from the moment you withdraw.

So, rule number one is to use a debit card when withdrawing from an ATM. 

Compared to credit cards, debit cards do have fewer protections when it comes to fraud, theft and liability. However, if you’re planning on making ATM withdrawals abroad, then a debit card is necessary to save you on exorbitant fees and interest repayments.

When using an ATM abroad, even with a debit card, there are still some additional fees to watch out for. You can expect the following fees when withdrawing cash abroad:

  • Out-of-network ATM fee—depending on your bank, it’s likely you’ll be charged a fee when you withdraw from an ATM that belongs to a different network, anywhere between $1.50 to $5, or a percentage of the withdrawn value. Some banks even charge a higher international out-of-network ATM fee compared to their domestic out-of-network fee. For example, Bank of America charges $2.50 for domestic out-of-network ATM withdrawals and $5 for international out-of-network ATM withdrawals
  • ATM operator fee—if you’re using an out-of-network ATM, then you’ll be liable to pay an additional fee to the bank that owns the ATM. In this case, you’re being charged twice to withdraw your money
  • Currency conversion fee—charged either by the ATM operator or card issuer to cover the costs of converting your currency

With the wrong sort of debit card, using ATMs abroad can be an expensive business.

However, you can avoid some of these fees by selecting a debit card issuer that doesn’t charge international out-of-network ATM fees and that reimburses ATM operator fees. An alternative option is choosing a provider with a global network of ATMs.

If your next vacation is right around the corner, and you don’t have time to get a new card, your best bet is to withdraw more cash each time you visit an ATM to reduce the total number of visits. While you won’t avoid paying out-of-network ATM fees and operator fees, the less you visit an ATM, the less often you’ll pay these fees. 

Also consider the fact that in many parts of the world, there’s a demand for foreign currency. Sometimes paying in US dollars will get you further than paying with the local currency.

Just beware that carrying large amounts of cash comes with increased risk. Although cash remains king in many corners of the world, if it gets lost or stolen, there are very few options for getting it back compared to stolen credit, or even debit, cards.

Cards With No ATM Fees

Here are some of the best debit card accounts without ATM fees that you can open.

Schwab Bank High Yield Investor Checking® Account

Opening a Schwab Bank High Yield Investor Checking® account is one of the best ways to avoid paying ATM fees abroad.

When you open the account, it will open in conjunction with a Schwab One® brokerage account, as the checking account is available through the brokerage account only. However, there are no monthly minimum balances, fees, trade or funding requirements to hold the brokerage account. 

The same applies to the checking account—it’s free of monthly balance minimums and fees, and even allows you to earn interest on your balance.

The standout feature of the checking account is that it gives you unlimited worldwide ATM reimbursements. Similarly, in the event you end up using your Schwab card to pay for a purchase abroad, you won’t need to worry about paying any foreign transaction fees.

Fidelity Cash Management Account

The Fidelity Cash Management account is a type of brokerage account that also allows for saving and spending.

The account comes with a debit card which will save you money abroad. As long as you withdraw from ATMs displaying the Visa®, Plus® or Star® logos, all ATM fees will be reimbursed by Fidelity. 

Just keep in mind that there is a daily maximum withdrawal limit of $500. Additionally, card purchases will be charged a 1% foreign transaction fee, so it’s best to stick to your non-foreign transaction fee incurring credit card for purchases.

A beneficial feature of the cash management account is Fidelity’s FDIC Insured Deposit Sweep Program. Your uninvested cash balance will be deposited into participating bank accounts, up to $245,000 per account. By staying within the FDIC limit of $250,000 per account, your aggregate funds will be insured far higher than the normal FDIC limit across all accounts.

Capital One 360 Checking Account

Alongside its competitive travel rewards credit cards, Capital One offers a debit card linked to a checking account that’s excellent for avoiding international ATM fees.

The account is free of minimum balance requirements and fees. It also won’t charge you any foreign transaction fees when making purchases abroad.

Likewise, you can make free withdrawals at all 70,000+ ATMs within the MoneyPass and Allpoint® networks, which cover the U.S., Canada, Mexico, Puerto Rico, the United Kingdom and Australia. For out-of-network withdrawals, Capital One won’t charge you any extra fees, but they also won’t reimburse ATM operator fees.

First Republic Bank’s ATM Rebate Checking Account

First Republic Bank’s ATM Rebate Checking account does what the name says. 

The account, which comes with a debit card, offers free ATM withdrawals across a network of 800,000+ ATMs, as well as offers reimbursements for out-of-network ATM operator fees. It’s also free of foreign transaction fees on card purchases.

The account does, however, have a minimum opening balance requirement of $500, in addition to an average daily balance of $3,500 to avoid a monthly service fee of $25.

Betterment Checking Account

Betterment is known for offering automated portfolio investment services. However, it also offers a mobile-first checking account with a Visa debit card.

Betterment itself isn’t a bank, but insures your funds up to the FDIC limit of $250,000 via nbkc bank. The account is completely free of fees, and this extends to those incurred abroad. All ATM fees will be fully reimbursed and there are no foreign transaction fees to worry about.

The debit card even allows you to earn cashback rewards on purchases at thousands of brands from Costco to Adidas.

Final Thoughts

Travel doesn’t need to be expensive—but it will be if you forget to include the right types of cards in your luggage.

A foreign transaction fee-free credit card is crucial in saving you on unnecessary fees abroad. Likewise, a debit card that doesn’t charge out-of-network ATM fees and reimburses operator fees is key for fee-free withdrawals.

And remember: if you’re offered to pay in local currency or US dollars, choose the former.