Traveling Abroad? Choose Credit Cards Without Foreign Transaction Fees

/ BY / Credit Cards

When you've carefully budgeted for a trip abroad, you don't want to pay extra for using your credit card to make purchases there. But if you're not careful, you may find out that your credit card company is tacking on an extra fee every time you use your card outside the U.S.

Foreign transaction fees can run between two to three percent of your purchase amount, depending on your credit card agreement. That means if you've budgeted $4,000 for your trip abroad -- hotels, airline, food, sightseeing, gifts, etc. -- you could end up paying an additional $120 in fees. (That's enough to buy a nice souvenir or have a good restaurant meal.)

Some credit card companies are even charging for foreign purchase you make while physically based in the U.S. If you see an item from an overseas seller on an auction website, or make a purchase directly from a foreign company, you may be hit with the foreign transaction fee. There have also been some reports of travelers booking airline tickets on a foreign airline through a site like Expedia and having to pay the foreign transaction fee on that purchase. If you're planning such a purchase, check with your card company and/or read your credit card agreement to see if such charges will apply.

Fortunately, some credit card issuers -- notably Capital One and Discover -- have eliminated international transaction fees on all of their cards. Other companies, like Citi, Chase and American Express, have eliminated the fee for certain cards. So if foreign travel is in your vacation plans this year, check your card agreement carefully or call the customer service number to verify whether or not you'll be charged a foreign transaction fee. If your current card does, you may want to apply for a card that doesn't charge that fee.

Tips for using your credit card abroad

Before you take a trip abroad, it's always a good idea to notify your credit card issuer to let them know. Capital One recommends that you be prepared to provide:

  • Your credit card number
  • Your travel destination
  • Your travel start and end dates
  • Which cardholders will be traveling

Make the call a week or so ahead of time, since it takes two business days for this information to be updated in the company's records.

Here are a few more suggestions:

  • Since credit cards can get lost, stolen or declined when you're traveling abroad, it's always a good idea to have a second credit card with you to serve as backup
  • You may also want to ask your card issuer if you can exchange your magnetic stripe credit card for a "chip and pin" card that's widely used overseas. These credit cards are "smart cards" that contained an embedded microprocessor that makes it more difficult to use them fraudulently.
  • Carry your passport with you, since overseas merchants may ask you to provide some form of identification when you want to use your credit card.
  • The Investopia site suggests that you insist that any transaction you make when traveling abroad is listed in the local currency. It warns that merchants may take advantage of unwary travelers by converting the local currency to U.S. dollars at an unfavorable rate of exchange.
  • Keep your credit cards in sight. Don't hand them to merchants or to restaurant employees who can disappear into the back of their establishments and do a quick duplication of numbers.
  • Keep records of your credit card numbers and their customer service phone numbers with you, so that if you do have a problem -- a card lost, declined or stolen -- you can call to get the problem straightened out as soon as possible.

Having a credit card when you're traveling abroad is a real convenience, but there's no reason to pay more than you have to for the privilege. A little upfront homework may result in some significant savings for your trip abroad.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.