Why am I being charged a foreign transaction fee?

Understanding Foreign Transaction Fees

When using your credit card abroad or for purchases involving foreign currencies, you may encounter a foreign transaction fee. This surcharge is commonly levied by card issuers to cover the costs of processing international transactions.

What Triggers a Foreign Transaction Fee?

Foreign transaction fees are typically applied when:

• Non-US Dollar Currency: When a purchase is made in a currency other than the US dollar, such as euros or yen.
• Foreign Banks: If the transaction is processed by a foreign bank, even if the purchase is made in US dollars.

How Much is the Fee?

Foreign transaction fees typically range from 1% to 3% of the purchase amount. The exact fee varies depending on your card issuer and the specific transaction.

Why Do Card Issuers Charge These Fees?

International transactions often involve additional costs for card issuers, including currency conversion fees, network fees, and fraud prevention measures. Foreign transaction fees are used to offset these expenses.

How to Avoid Foreign Transaction Fees

• Credit Cards with No Foreign Transaction Fees: Some credit cards, such as travel rewards cards, offer no foreign transaction fees.
• Exchange Local Cash: If possible, exchange cash locally to avoid foreign transaction fees on large purchases.
• Use a Debit Card with a Low Foreign Transaction Fee: Some debit cards have lower foreign transaction fees than credit cards.

Conclusion

Foreign transaction fees are a common surcharge associated with international transactions. By understanding what triggers these fees and exploring options to avoid them, you can save money on your overseas purchases and maximize the value of your credit or debit card.