Foreign transaction fees apply to online purchases when the merchant is based outside the U.S. That goes for both debit cards and credit cards with foreign transaction fees. For example, if you buy something online from a merchant in the U.K. and pay with a card that has a foreign transaction fee, that fee will apply. Foreign transaction fees on credit cards can add as much as 3% onto each international purchase you make. But there’s an easy solution: Just use a credit card with no foreign transaction fee whenever you buy something from a foreign seller.
So when in doubt, a no foreign fee card is the way to go. And there are plenty with really good rewards. Plus, credit cards get you great currency conversion rates.
Here’s when foreign transaction fees apply online (and how to avoid them):
The Basics: Foreign transaction fees apply online when a transaction is processed outside the United States. If you see prices listed in non-U.S. currency, there’s a good chance you’ll be charged a foreign transaction fee on your purchase.
Fees on U.S. Websites: If you buy something on Amazon.com from a seller in China, Amazon processes the payment, but a foreign transaction fee may still apply because the merchant is located outside the U.S. Remember, your card issuer is the one charging the fee, not the merchant. Similarly, if you book international travel through a U.S. website, you could still be tagged with a foreign transaction fee if the purchase is processed by a foreign airline, hotel, etc.
Avoid Declined Transactions: Your credit card company could mistake international purchases for fraud and decline them, especially if they don’t match your usual spending habits. You can avoid the inconvenience by notifying your bank or credit union about any international travel or shopping plans you have.
Prepaid Travel Cards: Even a credit card with foreign transaction fees is better for international travel or shopping than a prepaid travel card, such as the Visa TravelMoney Card or the Mastercard Travel Card. Their foreign transaction fees can be up to 5.5%. Plus, they can charge several other fees, such as reload fees, withdrawal fees and monthly maintenance fees.
Another thing to watch for is dynamic currency conversion, which is when an international merchant offers to process your transaction in U.S. dollars. It’s supposed to be for your convenience, and that might be true in some cases. But it’s often a trick that lets a merchant apply an unfair exchange rate to pad its profits a bit, at your expense. So it’s best to decline the overture. Credit cards automatically offer great currency conversion rates, and you can always use your phone (or a basic calculator) to convert prices to dollars if that would make international shopping more comfortable for you.
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