How to Avoid Foreign Transaction Fees – 5 Tips
Are you planning on traveling but don’t want to waste hard-earned money on foreign transaction fees?
Maybe you have booked your flights, packed your bags, and are ready to go?
Before jumping on that plane, make sure you have organized how you will exchange money abroad so can those pesky foreign transaction fees.
Exchange kiosks and foreign ATMs are an easy way to waste hard-earned money. They have high transfer and transaction fees, not to mention their terrible exchange rates.
There is also this awful little thing called a foreign transaction fee that may be attached to your credit card. It’s worth looking into before you go.
We have come up with five ways to make sure you’re getting the most bang for your buck when traveling abroad.
How to Avoid Foreign Transaction Fees
Before You Go – Speak to your bank about your foreign transaction fees
Find out what fees are associated with your debit card and your credit card when traveling abroad. Every bank offers different card options for traveling.
Go on to your bank’s website under ‘fees’ to confirm what fees are associated with your card.
The key here is to look for the words’ foreign transaction fee.’ This sneaky little guy is a processing fee charged by your bank for every transaction aboard.
There are some credit cards that offer no foreign transaction fees and it may be worth applying for one of those if you are expecting to do a fair bit of travel. It will save you a fair bit of money in the long run.
Often foreign transaction fees will be different from ATM withdrawal fees.
ATM withdrawal fees typically have a one-time set fee between $1 – $5 as well as a foreign transaction fee.
The foreign transaction fee is generally 3% of the transaction amount. That’s not so bad, right?
If you’re heading to Canada for a long weekend to visit your Aunt Sally, it may not be a big deal.
But what about those once-in-a-lifetime trips. The epic European adventure or the two-week road trip through New Zealand?
A study conducted by Learn Vest found that on average 66% of Americans spend 10% of their annual income on vacations.
Let’s say you decide to go swimming with dolphins, and it cost you $100. Your bank will charge your credit card an extra $3 as a foreign transaction fee.
After the dolphins you’re hungry. You want dinner, a t-shirt, and ice cream as you stroll down the beach to watch the sunset. That 3% adds up fast!
💡 Pro Tip: Confirm what credit and debit cards you have and the associated fees attached before you travel abroad.
Get A New Credit Card
If you have learned that your credit card does have a foreign transaction fee, then you may need to find a new one.
What credit cards have no foreign transaction fees? Well, there are many options but it’s best to shop around for a card that suits your travel interests.
When you search for a new credit card decide how long you’re traveling and how often you will use your card. Below are three of the best travel credit cards currently for US travelers. Be sure to check them out and compare results.
Top Three Credit Cards With No Foreign Transaction Fees
Credit cards with no foreign transaction fees will save you more money when traveling abroad than cards that offer extra travel points.
Shop around and compare your bank with other credit card providers before you go.
>> If you need to reduce credit card debt before you travel Financer.com has the answers here.
Take Cash With You To Avoid Foreign Transaction Fees
It is always a good idea to buy some foreign currency from your local bank before you go.
How much you need will depend on where you are going. Most developing nations and holiday destinations will have credit and debit options everywhere.
However, if you are traveling to more intrepid places, having more cash will help with unexpected fees. Some countries don’t offer card transactions at every store.
Buying from your local bank is often the cheapest way to go about buying foreign currency.
Keep a lookout for exchange rates over the month before your trip and buy on a day that you will get the most bang for your buck.
It is always risky when traveling with more significant amounts of cash.
💡 Pro Tip: Never keep all your cash in one spot while traveling. Hide it in a few places that you will remember, like a sock, wallet, or an inner part of your suitcase. That way, if the worst happens, you have a backup for emergencies.
Avoid Foreign Currency Exchange Kiosks
You will see them in every airport and often scattered throughout holiday destinations.
The exchange rates you get at these places don’t compare to what you can get from your travel credit card.
If you don’t need to get cash out, using your credit card is the cheapest way to purchase items abroad.
Avoid Hotel ATMs
If you need more cash while you are away, look for a bank ATM with a plus sign on it.
There will be the usual one-off charge for the transaction, but they are generally much cheaper than hotels or store ATMs.
Fees at hotels or stores can charge anywhere from $1 – $10 per transaction. Be aware that many overseas.
ATMs have withdrawal limits, so if you may need to do multiple transactions depending on the money, you require.
Try to limit your transactions as much as possible. Be aware that some ATMs have withdrawal limits, so if you may need to do multiple transactions depending on the money you require.
💡 Pro Tip: Get a credit and debit card that has no foreign transfer fees. Avoid ATMs as much as possible when abroad and take some emergency cash with you.
Getting financially organized before you go will not only give you peace of mind. It will also allow you to spend money on what truly matters – creating memories.
How much is a foreign transaction fee?
The typical rate for foreign transaction fees on credit cards are usually 2% to 5% of the purchase amount, including taxes and shipping costs. Check your cardmember agreement for detailed fees on international transactions.
As an example, the Chase Freedom foreign transaction fee is usually 3%. However, certain cards like the Chase Sapphire Reserve or Chase Sapphire Preferred card, don’t have any international transaction fees.
What if I need to use my credit card while abroad?
Before you travel abroad, contact your credit card company and confirm whether you will be charged foreign transaction fees, and how much they are. While traveling abroad, review your monthly card statement to keep track of any unexpected fees.
Some credit cards, especially travel credit cards, don’t charge foreign transaction fees as part of the perks offered to cardholders. Some credit cards also waive foreign transaction fees for a certain period, typically one year, as a promotional offering to new members.
If you have found this content valuable or have some other ways to avoid transaction fees abroad, please leave a comment below.