Why You Need a No Foreign Transaction Fee Credit Card
Even if you’re not a world traveler, you might get stuck paying foreign transaction fees on credit card purchases. Matt Schulz from CreditCards.com joins Money Girl to explain foreign fees, which types of cards you should carry when traveling, and the best no-foreign fee cards available to save money.
Laura Adams, MBA
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Why You Need a No Foreign Transaction Fee Credit Card
If you plan to travel outside of the U.S., or even purchase items online from a foreign company, expensive credit card fees can spoil your fun by adding up to 3% to your bill.
But the good news is that it’s easy to avoid these charges by choosing a credit card that waives all foreign transaction fees.
In this week’s podcast, Money Girl is joined by Matt Schulz, senior industry analyst at CreditCards.com. He explains foreign transactions fees, gives traveling tips, and recommends the best credit cards to take on your next overseas trip.
Free Resource: Travel Card Comparison Chart (PDF download)—Laura compares the best no-foreign transaction fee credit cards!
How to Avoid Credit Card Foreign Transaction Fees
Here are 5 tips to avoid expensive foreign transaction fees no matter if you’re on vacation or shopping online:
Tip #1: Understand when foreign fees apply
Banks and card issuers charge foreign transaction fees when you use a U.S. credit card outside of the U.S. or make a purchase through a foreign bank. For example, if you purchase clothing from a European company’s website (even if you pay in U.S. dollars), you typically also have to pay an additional transaction fee.
However, it’s more common to get blindsided by foreign transaction fees after you return from an overseas vacation and see them on your next credit card statement.
See also: Tips for Saving Money on Travel and Cruise Vacations
Tip #2: Maintain good credit
In general, credit cards that offer the best benefits—such as travel rewards, cash back, no fees, and low interest rates—also require you to have good or excellent credit.
So, in order to qualify for some of the best no-foreign transaction fee cards, you’ll need to keep your credit in good shape. For strategies to build credit fast download my free Credit Score Survival Kit tutorial.
See also: Best Tips to Improve Your Credit Score
Tip #3: Shop and compare card benefits carefully
Shopping for a credit card can be confusing because there are so many details in the rewards. Compare benefits carefully and choose cards that align with your spending habits and amounts.
For instance, if you don’t travel often, using a no-foreign fee card that offers cash back card might be more valuable than one that accrues points for travel miles.
Tip #4: Look for a chip-and-PIN card
As of October 1, 2015, most U.S. merchants will accept EMV credit cards with chip-and-signature technology, which requires you sign for purchases the same way as with magnetic stripe cards.
However, many countries rely on chip-and-PIN technology, because it offers additional security. It requires you to input a personal identification number, just like you do for ATM transactions and in-store debit card purchases.
So opting for a Visa or MasterCard chip-and-PIN card increases or eliminates the chances of your card not being accepted in some situations overseas.
Also see: What You Need to Know About EMV Chip Credit Cards
Tip #5: Choose the best currency
When you make foreign credit card purchases, either abroad or online, you might have the option to pay with U.S. dollars or in the local currency. The best option depends on the type of credit card you have.
If your card waives foreign transaction fees, choose the local currency whenever possible. That helps you avoid a currency conversion fee, which might range from 3% to 7%. However, if your card charges foreign fees, paying in U.S. dollars is generally the least expensive option.
Not all card issuers charge currency conversion fees, so be sure to check the terms of your card account. The credit card industry is very competitive, so as more consumers opt for cards with a no-foreign transaction fee benefit, more issuers will offer it.
Taking advantage of a no-foreign fee card will help you cut the cost of foreign travel and purchases so you can save more or splurge on a few upgrades during your vacation.
If you’re ready for help managing debt, building credit, and reaching big financial goals, check out Laura’s private Facebook Group, Dominate Your Debt! Request an invitation to join this growing community of like-minded people who want to take their financial lives to the next level.
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Travel The World image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.