Traveling Overseas? Pack the Proper Plastic

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We are quickly approaching the travel season. If you are taking an international trip, the journey is never inexpensive, but choosing the right credit card can help cut costs. Most credit cards add as much as a 3% international transaction fee to the cost of your purchase. “This international transaction fee is assessed to any purchase whether it’s a $3 piece of pizza or a $5,000 piece of art. Travelers can avoid this fee by comparing credit cards and choosing the right card before you go,” says Bill Hardekopf, CEO of and author of The Credit Card Guidebook.

“Capital One is currently the only major issuer that does not charge a foreign transaction fee. If you make a $500 purchase, using a Capital One card will save you up to $15.” Pentagon Federal Credit Union recently eliminated the 2.5% international transaction fee from the PenFed Premium Travel Rewards American Express Card.

Each time you use your credit card outside the United States, the network (American Express, MasterCard, Visa) that processes the transaction charges your bank a percentage of the transaction (typically 1%) to convert dollars to the local currency. The bank that issues your card also charges a fee for the transaction (typically 2%). The currency conversion fee or international transaction fee will appear on your credit card statement.

Current rates for international transaction fees:

  • Capital One: 0%
  • PenFed: 0%
  • Discover: 2%
  • American Express: 2.7%
  • Bank of America: 3%
  • Chase: 3%
  • Citi: 3%

Before you leave, contact your issuer to ask about the fees you will pay for international transactions and if there is a minimum for the fee. Using a credit or debit card at foreign ATMs also adds additional fees. Before departing, ask your bank what the charges are for foreign money transactions and for “foreign” ATMs In addition to the international transaction fee, the ATM may also charge its own fee for withdrawals. If you plan to use your debit card, contact your bank to see if they have partner banks in the areas you are traveling. These partner banks may waive the withdrawal fees. Bank of America is a member of the Global ATM Alliance Bank that waives the fee if your bank is a member.

ATM fees on international transactions vary widely. Bank of America charges a $5 withdrawal fee, plus a 1% international transaction fee. Chase assesses a $3 withdrawal fee for non-Chase withdrawals outside the United States plus a 3% conversion fee. Citi charges a 3% fee after conversion to American dollars, plus $1.50 per transaction.

Here are some other credit card tips for international travel:

  • Cash Advances. Avoid using your credit card at an ATM to get cash. The fee is typically 3% or $10, whichever is greater. You will also immediately be charged the much higher interest rate for cash advances. The cash advance rate can be as high as 25% for some issuers.
  • Take a second card. Keep in mind that not all cards are widely accepted. If American Express is your primary card, it is not accepted everywhere, so have a MasterCard of Visa as a backup card. Discover does not have an extensive network in Europe and probably should not be your primary card.
  • Notify your bank and credit card issuer about your trip. While you are asking your bank about foreign transaction fees, tell them that you will be using your card while traveling out of the country. Otherwise, the foreign charges may raise a red flag with your issuer and a freeze could be placed on your account.
  • Take the phone numbers for contacting your bank from outside the United States.
  • You don’t have to leave the United States to be charged a foreign transaction fee. Issuers recently broadened the definition of a foreign transaction. It is no longer limited to a purchase in a foreign country. Some issuers now charge a 3% foreign transaction fee on transactions made or processed outside of the United States. Making a purchase in the United States could cost an additional 3% of purchase if that online merchant is in another country. Previously, the fee was not added when foreign transactions were made in US dollars.