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Traveling abroad has become more convenient than ever thanks to online travel booking apps, travel review sites like TripAdvisor, and the death of traveler’s checks. You don’t even need to exchange money before you hop on a plane to travel abroad these days. Instead, you can wait until you land and take money in the local currency out of an ATM (often with any fees reimbursed) and you can use a credit card to pay for nearly anything at millions of retailers worldwide.
Foreign transaction fees explained
But, what about foreign transaction fees? These fees – which are charged by major card issuers such as Chase and Bank of America – average around 3% of each transaction and can be charged on purchases made abroad with a credit card. Also keep in mind that foreign transaction fees may be made on purchases made online with overseas vendors as well.
Paying around $3 per $100 you spend may not sound like a lot, but these fees can add up in a big way if left unchecked. Plus, we always suggest avoiding foreign transaction fees for a simple reason — they add to the cost of your purchase without adding any value. When you pay these fees, you’re basically setting money on fire.
Fortunately, you can avoid foreign transaction fees altogether if you sign up for a credit card that doesn’t charge them. While there are dozens out there for consumers to try, travel credit cards like the Chase Sapphire Preferred® Card, Discover it® Miles, and Citi ® Premier Card are popular options to consider.
Other travel charges to be aware of
While foreign transaction fees can be avoided, they are not the only travel-related fees consumers should be aware of. Travel as an industry is rife with hidden and sometimes unpredictable fees that can spoil your plans or at least cause your travel budget to balloon out of control.
Other travel expenses you should try to avoid include:
- Checked baggage fees
- Flight change fees
- Fuel surcharges when booking award flights
- Overweight baggage fees
- Internet access
- Resort fees
- Rental car insurance
- Parking fees
- ATM fees
Yes, you should use a credit card when you travel
Keep in mind that many of the fees listed above can be avoided altogether if you pick up the right credit card before you travel. As an example, the Chase Sapphire Reserve card offers primary rental car coverage as a cardholder perk while also waiving foreign transaction fees. The card also offers a $300 travel credit each year to offset fees for Wi-fi, resort fees, checked bag fees, and any other travel expenses you have. Make sure to compare the best travel credit cards to see which option might offer the most perks for your needs.
In addition, to avoid fees and travel costs, using a credit card overseas is a great way to score zero fraud liability coverage. If your credit card is lost or stolen abroad, you won’t be on the hook for a single cent in fraudulent purchases.
Finally, the best travel cards and rewards cards let you earn cash-back, airline miles, hotel points, or flexible rewards for each dollar you spend.
The bottom line: Using a credit card when you travel can help you save money on foreign transaction fees and other costs, and it could even help you avoid fraud. But, you should choose your new card wisely since the benefits vary on different offers. Explore travel credit cards and their unique value proposition before your next trip, and you could gain consumer protections, rewards, and peace of mind.
Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank’s website for the most current information.