No Foreign Transaction Fee Credit Cards

A credit card with no foreign transaction fees will not assess an international surcharge on purchases that are processed outside of the United States. So it means you won’t have to pay extra when you use your card abroad or buy something from an international merchant while sitting on your couch.

Unfortunately, most credit cards have foreign transaction fees. The average is a bit less than 2% of what you spend. That can add up fast. But on the bright side, the average foreign fee has fallen by nearly 30% since 2010, according to WalletHub’s latest Credit Card Landscape Report. And one big reason is that far more credit cards with no foreign transaction fees are now available.

Using a no foreign transaction credit card on the Visa or MasterCard network is the cheapest, most convenient way to convert currency. In fact, such a card will save you up to 11% compared to exchanging hard currency at a local bank or airport kiosk, according to WalletHub’s latest Currency Exchange Study. And you don’t have to do anything special to benefit. Credit cards automatically convert the cost of an international purchase to U.S. dollars.

Credit cards provide other benefits to international travelers, too. For example, all credit cards have $0 fraud liability guarantees. That means you won’t have to pay for any unauthorized purchases. In contrast, if a pickpocket takes cash from you, that money is gone. Most credit cards also offer both travel insurance and rental car insurance, while 50% of cards provide financial assistance for international-travel emergencies.

So you might want to double-check that you have a credit card with no foreign transaction fee before your next international trip or purchase. The vast majority of credit cards still charge foreign transaction fees, according to WalletHub data. The average foreign fee is 1.97%.

You don’t need a special type of credit card to make purchases abroad. Whether a credit card will work in a given country depends solely on which of the four card networks it belongs to: Visa, Mastercard, American Express or Discover. Visa and Mastercard are accepted practically anywhere a credit card can be used worldwide. American Express and Discover lag well behind.

The only situation in which you might encounter some difficulties is when trying to use a U.S. credit card at certain vending machines and automated kiosks while traveling abroad. But that problem is easily solvable with a no foreign transaction fee debit card, which you can use to pay in cash.

The Capital One® Venture® Rewards Credit Card is the best credit card for international travel rewards and perhaps the best overall credit card deal on the market right now. It offers an initial bonus of 50,000 miles (worth $500 in travel) for spending $3,000 in the first three months. You’ll earn 2% back on all purchases, except for the 10% back you’ll get from hotels.com/venture, as long as you redeem your miles for travel. And Venture makes that extremely easy, letting you pay for any travel-related purchase charged to your account in the past 90 days. Plus, Venture doesn’t charge a foreign transaction fee, and you won’t have to pay its $95 annual fee the first year your account is open.

There’s more to international travel than rewards, though. You may also want to consider secondary perks, such as free international delivery for emergency replacement cards and insurance for rental car collisions, lost or delayed luggage, and accidents that occur in transit.  According to WalletHub’s research, Bank of America® Premium Rewards® Credit Card is the best credit card for international travel benefits, earning a score of 95.52%. Bank of America® Travel Rewards Credit Card (91.52%) and Barclays Arrival® Premier World Elite Mastercard® (88.00%) rounded out the top three in WalletHub’s report.

For more great offers, check out WalletHub’s international credit cards page.
 

Chip-and-pin credit cards use the combination of an embedded computer chip and a Personal Identification Number (PIN) to improve fraud protection. Basically, a cardholder must input a PIN when making a purchase. And that PIN must match data stored on the card’s secure microchip for the transaction to go through.

Chip-and-PIN cards are now the standard in Europe, Canada and Japan because they are much harder for fraudsters to copy or steal than magnetic-stripe credit cards, which have long been used in the U.S. And U.S. credit card companies are steadily rolling out chip-based cards for the same reason. But most U.S. chip cards use signature verification instead of a PIN. You can check out WalletHub’s article on the differences between chip-and-PIN and chip-and-signature cards to learn more.

The moral of the story, however, is that you should be fine with any “normal” credit card, as long as it’s a Visa or Mastercard with no foreign transaction fee. Sure, transactions made at unattended automated kiosks, such as those in train stations, may necessitate a chip-and-PIN card. But you can get around that by simply packing a no foreign fee debit card and withdrawing cash as needed.

Taking the following credit-card precautions will help you save money and avoid unnecessary hassle while abroad.

1. Get a no foreign transaction fee credit card. Do this before booking flights, hotels, etc. Foreign transaction fees will be assessed on any purchase made through a foreign merchant, even before you leave the U.S.


2. Call your credit card company. Most credit card companies require you to notify them of international travel plans. If you don’t, your account may be suspended due to suspicions of fraud. Capital One and American Express are the only major issuers that automatically detect when you’re traveling.


3. Know your info. Write down your account number as well as your credit card company’s phone number, and keep this information somewhere safe (not in your wallet). If your card gets lost or stolen, you’ll need both to get a replacement.


4. Don’t forget ID. Some countries may require identification to authorize a U.S. credit card transaction. So don’t forget your passport when you go shopping abroad.


5. Pay in the local currency. Decline any merchant’s offer to convert prices into U.S. dollars. This could be a trick known as dynamic currency conversion, which merchants often use to assess high exchange rates and line their pockets.

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 international credit cards), 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.

International travel is costly enough without having to pay extra just for swiping, dipping or tapping your credit card beyond U.S. borders. But foreign transaction fees are lurking, even domestically. Any purchase made through an international merchant and processed abroad is subject to a foreign fee.

To get a better understanding of what consumers know about foreign fees, how they influence our card choices and more, WalletHub conducted a nationally representative online survey from April 16 to April 24. We asked people about everything from their international travel and spending habits to whether they worry more about Chinese tariffs on steel or foreign transaction fees on credit cards. You can find the complete results in the following infographic.