Best Credit Cards with No Foreign Transaction Fees | Bankrate (2024)

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Credit range

A FICO score/credit score is used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any financial product.

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Why do banks charge a foreign transaction fee?

Overseas transactions are more complex than standard transactions as they require banks to convert the money spent into U.S. dollars. The total fee you pay often involves adding the charge from the issuing bank and the processing fee from the payment network (like Visa or Mastercard). However, Capital One and Discover don’t chargeforeign transaction fees on any of their credit cards.

Foreign transaction fees are becoming less common, particularly among premium or travel credit cards. However, many cards still impose the charge.

When can banks apply foreign transaction fees?

It can be hard to avoid foreign transaction fees when making purchases abroad. Unless you pay with a credit card that waives this fee, you’ll likely pay a foreign transaction fee for:

• Hotel bookings: While it largely depends on the location of the hotel and the specific travel provider,your issuer may charge a foreign transaction fee when you book a stay in another country.
• Online purchases: If you purchase something from a seller based outside the U.S. and your transaction is processed abroad,your issuer could charge a foreign transaction fee — even if you’re shopping from the comfort of home.
• Debit card, charge card or gift card purchases: Unfortunately, you can't escape foreign transaction fees just by using a different type of card. Credit cards, debit cards, charge cards and even prepaid gift cards commonly charge foreign transaction fees.

Foreign transaction fees typically show up on your credit card statementat the end of your billing cycle and you pay them when you pay your credit card balance.

Depending on the issuer and card, a foreign transaction fee typically ranges from 1 percent to 3 percent, but it can go as high as 5 percent.

On its own, one or two foreign transaction fees may seem reasonable, but the more you spend, the more those fees start to add up. When traveling overseas or shopping with international vendors, you may also have to deal with other common credit card fees that can decrease your purchasing power, including cash advance fees, ATM fees and conversion fees.

Foreign transaction fees by credit card issuers vary widely. Issuers like Amex and Discover have their own payment networks while other issuers, like Capital One or Chase, use Visa or Mastercard’s networks. Also, it’s not unusual for an issuer to charge a foreign transaction fee with some cards but not with others.

Here's a quick look at how the fee structure breaks down among several major credit card issuers:

If you travel overseas or make purchases in foreign currencies, it's worth understanding why a card with no foreign transaction fee might benefit you.

Reasons to get a card with no foreign transaction fees

When using your credit card internationally, follow these tips to ensure you’re spending your money wisely and not racking up unnecessary fees.

• Have a mix of credit cards. The excessive cost of foreign transaction fees can ruin a great experience when traveling abroad. While traveling internationally, you should use at least one credit card that doesn't charge foreign transaction fees if you want to keep these charges to a minimum. Be aware that not every credit card will work in every country, so before you go on your trip, make sure at least a couple of your credit cards use networks available in the places you’ll visit.
• Avoid cash advance fees. Withdrawing cash from an ATM with your credit card could cost you up to 5 percent of the amount withdrawn with each transaction. Additionally, you’ll also be on the hook for interest charges that are typically much higher than the normal interest charges you pay for carrying a balance. Try to avoid having to take out a cash advance by keeping some cash or a debit card on hand for emergencies.
• Check if you’re eligible for VAT refunds. Value-added tax (VAT) is a flat tax levied on purchases. The consumer owes the full amount of the tax to the government at the time of purchase. Some destinations offer visitors a refund on value-added tax for goods or merchandise. Details will vary by country, but typically you’ll need to ask the merchant to help you fill out a tax form and then show that form to customs upon your departure.
• Have a chip-and-PIN credit card. If it's time for you to get a new card, go for one that has both a chip and a PIN — as it can save you from having to get cash from an ATM when you're visiting another country, and the transaction fee might be less than the foreign exchange fee the bank tacks on to your withdrawal. These cards will have a small metallic computer chip and require a 4-digit personal identification number to help verify purchases. These cards are also more secure in general if you don’t want to worry about any fraudulent activity like stolen card data or a stolen physical card.

Should I get a no-foreign-transaction-fee credit card or traveler’s checks?

Whether you should get traveler’s checks or a credit card with no foreign transaction fee depends on your preferences, but keep in mind that getting traveler's checks may be more difficult than using a credit card. Some banks no longer offer traveler's checks, so you may have to jump through more hoops to get them.

However, with a credit card you can enjoy the same protections and benefits as you would with a traveler's check, such as:

• Replacement protection:If you lose or have your traveler's checks stolen, you can replace them, but many credit cards also come with replacement protection. If your card is lost or stolen, you may notify your issuer and they will deactivate the existing card and send you a new one.
• Broad acceptance: You could use traveler's checks at places that didn't take personal checks.However, you wouldn't have to worry about acceptance with a Visa or Mastercard credit card.
• Cash alternative: While an added benefit of a traveler's check is that you could exchange it for cash, using a credit card with adequate security features makes using cash internationally unnecessary.

• Using a traveler's check

  When obtained through an eligible bank, you can use a traveler’s check almost anywhere in the world to make purchases. The paper document is cashed in exchange for local currency once you’re abroad. They are also safer than carrying cash, since you can replace them if they are stolen or lost.

• Using a prepaid debit card

  These cards let you load money onto them at home, then use them to make purchases wherever you go — no matter where in the world you are. You can even use these cards online or over the phone, just as if they were a traditional credit card.

• Exchanging currency before you travel

  It’s a good idea to have some local currency on hand in case you're somewhere that doesn’t accept credit cards. Before you travel, stop by your local bank and ask to exchange your dollars for your destination’s currency. Your bank will likely charge lower exchange feesthan you’ll find at the airport (or none at all).

When evaluating the best credit cards with no foreign transaction fee, we take into account several factors, including how cards score in our proprietary card rating system and whether they offer features that fit the priorities of a diverse group of cardholders, from earning rewards to scoring a large sign-up bonus to saving on interest.

We analyzed over 250 of the most popular credit cards and selected standouts that carry no foreign transaction fee. We scored each card based on the factors most relevant to its primary category, including its rewards rate, estimated annual earnings, intro APR period, ongoing APR, perks and more to determine whether it belonged in this month’s roundup.

Here are some of the key factors that we considered:

Ask the experts: Is it worth it to get a credit card with no foreign transaction fee for a one-time overseas trip?