Ask an Expert: Overseas With No Credit Card Fees

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A Money Talks News reader recently asked me a question about one of my pet peeves…

I will be traveling abroad in the next few months and need a card with no foreign transaction fee. I already have a Discover card, which I don’t think has the fee. But I am nervous not many places abroad accept it.

I am willing to pay an annual fee provided the rewards associated with it are worth it. I don’t need to transfer any balances so that’s a non-issue.

Any suggestions?
– David

I love this question, David, because I’ve always hated foreign transaction fees.

These charges are usually 3 percent of the purchase price and have no justification whatsoever – they don’t defray any actual processing costs. They’re simply pure profit for the card issuer.

Fortunately, there are now more cards than ever that don’t carry this fee. You’re right that no Discover card has this fee any longer, but at the same time they don’t have an extensive merchant network overseas. Their network is getting larger, and they’re especially strong in China. But other than that destination, your best chances for merchant acceptance is a Visa or a MasterCard.

Chase offers several Visa cards with no foreign transaction fees, such as their Sapphire Preferred. This card offers double points for purchases from restaurants, and points can be redeemed for cash back or transferred to different airline and hotel loyalty programs. It has a $95 annual fee that’s usually waived the first year.

If you’re looking for a straight cash-back card, I’d recommend looking at the Capital One Cash Rewards card. It offers 1 percent cash back on all purchases, plus an additional 0.5 percent cash back at the end of the year, for 1.5 percent total. There’s a $39 annual fee, and like all Capital One products, there are never any foreign transaction fees.

Have a great trip, David!