What are the best credit cards with no foreign transaction fee?
WalletHub’ editors considered 1,000+ credit cards based on their foreign fees, credit-standing requirements and associated card networks. After all, there’s no point in wasting time on a bunch of offers that you can’t get approved for or using a card that won’t be accepted in certain countries. For example, cards on the Visa and MasterCard networks are the most widely accepted worldwide. Our editors’ also focused primarily on cards offering rewards, as we believe that leisure-travel expenses should be paid for in full, which makes interest rates relatively unimportant. And the right rewards card could help you save another 2% or more, on top of the 1% - 3% you’ll be saving on foreign fees.
2016’s Best Credit Cards with No Foreign Transaction Fee
There are ultimately many reasons to get a credit card with no foreign fee before traveling abroad or making purchases through an internationally based merchant. Here are some of the most important:
5 Reasons To Get One of 2016's Best Credit Cards with No Foreign Transaction Fee
- Most credit cards charge foreign fees. More than 70% of cards have foreign fees, according to our database. So if you don’t seek out a no foreign fee card, chances are you won’t get one. And no one wants to pay an extra 2% or 3% if they don’t have to.
- Foreign fees erode rewards. The average foreign fee is just over 2% of the amount you spend, according to our latest Credit Card Landscape Report, but many cards charge 3%. The average cash back credit card, on the other hand, gives you just over 1% back.
- Credit cards have the best exchange rates. Any Visa or MasterCard credit card will help you save time and money – up to 11% – relative to converting hard currency at a local bank or an airport kiosk. But a foreign fee would limit your savings.
- Pickpockets won’t be as scary. If someone robs you of cash while you’re in a foreign country, there’s not much you can do about it. That money is gone. But if someone steals your credit card, you can request an overnight replacement, and you won’t be held liable for any unauthorized charges.
- You won’t have to sacrifice. Getting a credit card with no foreign transaction fee does not mean giving up hopes of earning rewards or avoiding interest. Many of the market’s best credit cards do not charge foreign fees, so you can still find a great deal for your particular needs.
Never accept a foreign merchant’s offer to convert the cost of a purchase from the native currency into U.S. dollars. This might seem more convenient, but it’s actually just an excuse to charge an unfavorable exchange rate and profit off you even more. This little trick is known as Dynamic Currency Conversion
What is the cheapest way to convert currency?
Currency Exchange Study
According to WalletHub’s
, a credit card provides the cheapest form of currency conversion. As long as you’re using a credit card with no foreign exchange fees that is on the Visa or MasterCard network, you’ll save up to 6.41% and 10.84% on currency conversion relative to cash services offered at local banks and airports, respectively. Besides being cheapest, credit cards also provide the simplest means of currency conversion, given that it’s done automatically upon a purchase being made.
Please keep in mind that 90% of all credit cards have an average foreign transaction fee of 2.08%, according to WalletHub's data. That’s what makes planning ahead and getting one of the credit cards with no foreign transaction fee so important. Capital One used to be the only real player in this niche credit card category, but a number of other major issuers--including American Express, Chase, Citi and HSBC -- have since started offering credit cards without foreign transaction fees.
Will my credit card work outside the U.S.?
No special type of credit card is needed to make international transactions, though a no international fee credit card is necessary to avoid the 3% fee, that the vast majority of credit cards charge on any purchase processed outside the U.S. Whether a credit card will work in a given country solely depends on which of the four credit card networks it belongs to (i.e. Visa, MasterCard, American Express and Discover). Visa and MasterCard are accepted practically anywhere a credit card can be used worldwide. American Express’ reach is far less but still significant while Discover can only be used in about a quarter of the countries and territories that accept Visa and MasterCard outside the U.S.
European countries are increasingly moving away from the magnetic stripe credit cards used in the U.S. in favor of chip-and-pin technology. As a result, while you will be able to use your U.S.-issued credit card 95% of the time, you may be unable to use your card at some vending machines and automated kiosks in airports and train stations. Depending on the country, you might also need to show your passport for proof of identity when using a credit card or debit card.
What are chip-and-pin credit cards?
Chip-and-pin credit cards are becoming the standard in Europe, Canada and Japan. The main difference between them and the magnetic stripe cards we use in the U.S. is the fact that chip-and-pin cards provide better fraud protection by adhering to global EMV standards. This heightened protection is due to the fact that a consumer has to input a Personal Identification Number (PIN) that must match data stored on a secure microchip embedded within the card for a transaction to be authorized. Some U.S. credit card companies are beginning to offer chip-and-pin cards as well as chip-and-signature cards and chip-based contactless payment methods. Therefore, global credit card interoperability appears only a matter of time. In the meantime, regular credit cards with no foreign transaction fees will be sufficient for all purchases made abroad.
"Currently American cards do work in most places," says Eldad Boker, a professor with Johnson & Wales University’s Center for International Tourism. "Europe and Asia are moving rapidly toward a chip based card, which in the next few years will become a challenge for American tourists traveling without the chip based cards. Many automated kiosks in Europe already do not accept cards that are not equipped with the chip based technology. (Ex: Train and bus transportation system, some banks and others). With the spread of this technology to other parts of the world, the American tourist will need to request chip based card, from the issuing banks. A tourist without this type of a card will face many more challenges than a tourist that carries a chip- based card."
Indeed, transactions made at unattended automated kiosks, such as those in train stations, may necessitate a chip-and-PIN card, as not even chip-and-signature cards will work given their lack of a PIN for identity verification. But very few U.S. banks offer chip-and-PIN cards, and you can get around the unattended kiosk issue by simply taking a debit card with low international withdrawal fees along with you.
So, the standard magnetic stripe credit card will do the trick for now. That might change in a few years, but don’t worry, when chip cards become a true necessity it will be a big deal and you’ll hear about it.
What about cash?
international credit cards
Whenever you travel abroad, it’s a good idea to have cash. While the level of importance obviously depends on how developed the country you’re visiting is (the more developed, the more merchants that accept
), it’s inevitable that you will find yourself needing to make at least a few cash-only purchases (e.g. cab fare). So what’s the best way to go about getting it? Well, for starters, do not even consider using a credit card for a cash advance, as this will be very expensive, in light of the cash advance fee and APR. Your best options are a debit card or an ATM card. As these cards also come with foreign transaction fees, it pays to shop around before opening one.