What you should know about foreign transaction fees

Some credit card issuers charge foreign transaction fees for purchases cardholders make abroad or through foreign merchants. The fee is typically 1%-3% of the transaction amount.

Keep reading to learn about foreign transaction fees and how you might be able to avoid them.

What you’ll learn:

• A foreign transaction fee is a surcharge for a purchase made with a credit card outside the U.S.

• The fee might also apply to a debit card or prepaid travel card transaction.

• Foreign transaction fee charges are generally 1%-3% of the transaction.

• Capital One doesn’t charge foreign transaction fees. View important rates and disclosures.

A foreign transaction fee is a common credit card fee. Some credit card issuers add it to a transaction made outside the U.S. or with a foreign merchant online.

Foreign transaction fees are charged by card issuers. Currency conversion fees are charged by credit card payment networks for exchanging one country’s legal tender for another. Both fees may sometimes be combined and referred to together as a foreign transaction fee.

Capital One doesn’t charge foreign transaction or currency conversion fees, but other issuers might. View important rates and disclosures.

If you pay with a credit card from an issuer that charges foreign transaction fees, here are a couple of situations where you might come across them: 

• In a foreign country: Whether it’s for a quick bite from a sandwich shop or a designer leather bag, using your credit card for an overseas purchase may incur a foreign transaction fee. 

• Online from a foreign vendor: Say you’ve seen that bag on the website of a fancy French boutique. You may be charged a foreign transaction fee if you buy it online without ever leaving your couch.

Foreign transaction fees are typically calculated as a percentage of the total price of each transaction—generally about 1%-3%.

Capital One doesn’t charge foreign transaction fees. View important rates and disclosures.

To calculate a foreign transaction fee, you need to know the percentage your issuer charges. Then you multiply that rate by your purchase amount.

Say you make a $50 purchase and your issuer charges a 3% foreign transaction fee. Here’s how to determine how much the foreign transaction fee will cost:

1. Convert the percentage to a decimal. You do that by moving the decimal two places to the left. Three percent (3%) is .03 in decimal form.

2. Multiply the amount of your transaction by the decimal from Step 1 to find the foreign transaction fee amount. In this case, multiplying $50 by .03 gives you $1.50.

3. To figure out the total cost of your purchase, you can add the foreign transaction fee to the purchase price. Adding $50 and $1.50 means you would pay $51.50.

Not all card issuers charge foreign transaction fees. And foreign transaction fees can vary by card issuer and credit card. Debit cards and prepaid travel cards could also have foreign transaction fees. That’s why it’s a good idea to review your card’s terms and conditions.

For example, Capital One doesn’t charge foreign transaction fees. View important rates and disclosures. Learn more about credit cards that don’t charge foreign transaction fees.

There are ways to avoid foreign transaction fees. Here are a few:

Some travel rewards credit cards are designed with international travel in mind. They may have an annual fee, but the rewards and benefits can make it worthwhile.

Eligible Capital One cardholders can access Capital One Travel, where they can earn elevated miles for travel bookings. Plus, Capital One doesn’t charge foreign transaction fees. View important rates and disclosures.

Using your debit card while abroad could be a way to avoid foreign transaction fees if your card doesn’t charge them. But some accounts might have international ATM fees. Separate ATM operator fees are something to look out for too.

Before you leave the country, you might want to check whether your current card charges these fees. If so, you could find out whether there’s a branch location or partner bank where you’re headed. You might be able to make free cash withdrawals from one of those locations.

Capital One doesn’t charge additional fees for foreign debit card transactions. But you may be charged a fee by the operator if you use an out-of-network ATM.

Having local currency on hand can be a convenient way to avoid foreign transaction fees if you don’t mind carrying cash. But if you plan to get it from a foreign ATM, there could be other fees. Currency exchanges may be available at the airport. But those might charge higher conversion rates than your bank or credit card.

Consider researching the exchange rate and exchanging currencies before you travel, especially if you’re unfamiliar with the country you’re traveling to.

Foreign transaction fees can add up quickly, but there are steps you can take to avoid them. Using local currency is one option. Another is using a credit card that doesn’t charge foreign transaction fees.

Capital One offers travel rewards credit cards with exclusive benefits and elevated rewards that can help make your travel experience even more enjoyable.

• Elevate your next adventure with the Venture X card, which offers premium travel benefits and more.

• Earn unlimited 2X miles on every purchase, every day and 75,000 bonus miles once you spend $4,000 within three months of opening an account with the Venture card.

• Earn unlimited 1.25X miles on every purchase, every day with the VentureOne card.