Credit card foreign exchange fees can cost you a lot of money while you are traveling, and you may not be aware how much your own credit card issuer will charge you for foreign transactions until it is too late.
The networks, Visa and MasterCard, charge the credit card companies 1% of every foreign transaction, and while many banks used to simply absorb the foreign exchange fee, several years ago they started passing on the burden to consumers and then some.
Nowadays, a typical credit card issuer will charge you up to an extra 2%, which can really add up while you’re traveling. Luckily, a few banks still do not charge their customers foreign exchange fees, because look how much these fees can cost you if you’re not aware of them.
With a typical foreign exchange fee of 3%, you will pay $30 extra for every $1,000 you spend while traveling. That’s $150 in foreign exchange fees if you spend $5,000 on your vacation.
With a fee of 2%, you’d spend an extra $100 if you spent $5,000, or $20 for every $1,000.
If you plan on living in a foreign country for any amount of time, the fees could be horrendous, so it is imperative that you get a credit card that does not charge you a foreign exchange fee.
The only major credit card issuers that do not charge foreign exchange fees are Capital One and Discover, plus American Express started eliminating foreign transaction fees for certain cards starting in 2011.
Here’s a list of current foreign exchange fees for major credit card issuers.
None – Capital One
None – Discover Cards (Discover does not charge a foreign currency transaction fee.)
1% – USAA (only available to military and immediate family members)
2% – Pulaski Bank
2.7% – American Express (No foreign transaction fees for Platinum and Centurion U.S. personal and business cards starting in 2011)
3% – Citi Cards
3% – Chase
3% – Bank of America
3% – HSBC
3% – Providian
3% – Barclaycard/Juniper
3% – US Bancorp
3% – Wells Fargo
The fact that most credit card issuers add the extra charge on top of what they themselves have to pay is really insulting to consumers, so we highly recommend you use Capital One or Discover cards if you plan on traveling outside of the U.S., and you may just want to make one of them your everyday card.
Capital One credit cards offer a wide variety of cash back and airline reward cards, so there are many options available to you.
Apply for a credit card with no foreign exchange fees now if you plan on traveling anytime soon, as you will need a couple of weeks for processing and delivery.