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Dear Credit Card Adviser,
I know some card issuers do not charge a foreign transaction fee themselves, but it was my understanding that Visa and MasterCard charged 1 percent on foreign transactions through their networks. Is this or was this true?
— Richard

Dear Richard,
Yes, Visa and MasterCard have a standard 1 percent charge in place to convert transactions into U.S. dollars when you’re shopping with your credit card overseas, but it’s conceivable that you won’t wind up paying it.

Some issuers foot the bill for Visa and MasterCard’s currency conversion as a competitive differentiator. Capital One, for instance, doesn’t charge any type of foreign transaction fee, including the Visa or MasterCard charge, on their credit card products. Discover is on its own payment platform and doesn’t charge a foreign transaction fee on any of its cards.

Other issuers will waive foreign transaction fees or the network’s currency conversion fees on specific cards. This practice is particularly prevalent among travel rewards cards as issuers try their best to woo frequent fliers.

You can find out whether you’re technically being charged Visa and MasterCard’s currency conversion fee by checking your card’s terms and conditions. I say “technically” because while some issuers do waive the network charge, others incorporate its cost into their base foreign transaction fee to minimize confusion.

If you travel a lot and are looking to avoid the fee, do a little comparison shopping. (Just make sure your credit score can afford a small hit before you apply for a particular payment method. Credit card applications will generate a hard inquiry on your credit report.)

Foreign transaction fees generally fall between 2 percent and 3 percent. Keep in mind, some cards that waive these charges carry an annual fee, so you may need to do a bit of number crunching to determine if that particular product is worthwhile.

You can check out Bankrate’s chart for a quick overview of how the major issuers assess their foreign transaction charges.

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