Traveling Abroad – Credit Card Fees

Credit cards are useful tools when traveling abroad. In using them, you minimize the need to exchange and carry large sums of money which is especially important when visiting tourist spots, havens for many pickpockets. However, it is important to make sure you do not get pickpocketed by fees when using your credit cards abroad.

Avoid Foreign Transaction Fees

Foreign Transaction Fees (FTF) are exactly what they sound like - fees charged for using your credit card internationally. It is actually two fees – one by the credit card network (Visa, American Express, etc.) and one by the issuer (Chase, Citibank, etc.) The credit card network charges 1% and the issuer charges 2-3% meaning you are paying an extra ~3% per transaction.

All foreign credit card transactions are assessed FTF. However, certain issuers will not charge anything and actually absorb the network’s fees meaning the user will not pay any FTF. These credit cards usually prominently display that they offer no foreign transaction fees in their advertising and their website.

If you are unsure if you cards have FTF, you could always call your credit card’s customer service line or check your credit card’s terms and conditions under the fees section (usually under transaction fees). However if they do not advertise it, they probably charge FTF.

Below is a chart of issuers and their average FTF. All Discover and Capital One credit cards do not have any FTF. However, Discover is not widely accepted internationally. American Express credit cards that charge a FTF have a slightly lower fee because they are both the credit card network and the issuer.

Issuer	Average FTF
American Express	2.70%
Bank of America	1% to 3%
Barclaycard	1% to 3%
Capital One	0%
Chase	3%
Citibank	3%
Discover	0%
US Bank	3%
Wells Fargo	3%

Charge in Local Currency

Many foreign merchants ask you if you want to charge in USD or the local currency when using your credit card. Always charge your card using the local currency.

Merchants ask this because if you choose USD then they get to set the currency exchange rate in a process called Dynamic Currency Conversion. DCC allows the merchant to pick an unfavorable exchange rate for you and thus padding their profits. However, when you opt to use local currency then the conversion is automatically done by your credit card network which does not have such bias.