Credit Card Foreign Transaction Fee

The wonders of having a credit card do not stop on your own turf.
You can go anywhere around the world and you’ll still not worry about a thing so long as you’re holding your dearest platinum. However, before packing your bags and your cards for the journey, make sure to check the credit card foreign transaction fee that you’ll be paying for every purchase you do overseas. What exactly is a credit card foreign transaction fee and how is it calculated?

A credit card foreign transaction fee is what you pay your company for allowing you to use your credit card when you go overseas. Previously called the currency conversion fee, this amount is not absolute and varies depending on the card issuer. Even the guidelines and terms that come with the applicability of this fee are different.

Let’s start with Visa and MasterCard, the middlemen that handle transactions between the shop or store and your card issuer. These two companies each charge a 1% credit card foreign transaction fee. This is just one thing on the list. Your bank or card issuer will also be likely to charge their own credit card foreign transaction fee (usually slightly bigger) in addition to that of Visa and MasterCard. Bank of America, Citibank, Chase, and HSBC for example, charge an additional 2% as credit card foreign transaction fee. This makes the foreign transaction fee a total of 3%. American Express, which does not use either Visa or MasterCard, charges 2.7%. Discover, on the other hand, charges a credit card foreign transaction fee of 2%. Capital One and Charles Schwab are the only companies that don’t charge any credit card foreign transaction fee.

Another thing to remember: have the card issuer give you a definition of “foreign”. You’ll be surprised to hear that even if you don’t get out of the country, there’s still a great chance for you to pay a credit card foreign transaction fee. Visa and MasterCard have recently both changed the definition of “foreign transaction”. It now refers to any purchase that uses a foreign bank at any time during the transaction. So, buying clothes online from a company that is UK-based is considered a foreign transaction especially if the company uses a local bank to process the transaction.

Whenever you transact business on foreign ATMS, you’ll also be likely to see another transaction fee on your billing statement. Bank of America, for example, gets 5 dollars plus 1% foreign transaction fee whenever you use nonGlobal ATM Alliance ATMs. Citibank, on the other hand, charges an additional 3% foreign transaction fee when you use Citibank ATMS but will add $1.50 to the 3% when you transact through non-Citibank ATMs. HSBC charges 1% for all ATM withdrawals while Chase gets $3 plus 3%.

A credit card foreign transaction fee can be a lot to handle considering the other fees that appear on your monthly statements so make sure you read all terms, especially those in fine print.


Source: Credit Cards For People With Bad Credit Rating

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