How to choose a credit card with no foreign transaction fees
If you use a credit card while traveling internationally, overseas transaction fees can quickly snowball and increase your card balance.
These fees are incurred when your credit card issuer processes a transaction you make abroad. Since international transactions can be more complicated, your card company may charge you up to 3% on top of the purchase amount for the extra effort. These costs may be added during a trip.
However, you can find credit cards that don’t charge such a fee – and you don’t have to just consider travel rewards cards for that benefit, either. Many cash back rewards, balance transfers, and secure credit cards come with no overseas transaction fees. Some issuers, including Discover, Capital One, and PenFed, do not charge this fee on any of their cards.
Here’s what to keep in mind when looking for a credit card with no overseas transaction fees.
Check if the card can be used at destination
If you are traveling abroad, NerdWallet generally recommends use a credit card for purchases where possible. It is safer than carrying cash and offers better protection than debit cards in the event of fraud. In addition, you have little or no responsibility for the loss or theft of your card.
So, it’s best to find a credit card that you can use that doesn’t charge transaction fees abroad. But it may be irrelevant if the card is not accepted at your international destination.
Some card networks, like Visa, are widely accepted around the world, while others, like Discover, tend to be limited outside of North America. Finding out what is accepted at your destination will help you narrow down your options.
Determine other card goals
Once you’ve determined which cards meet the minimum utility bar for your travel plans, consider any additional features you might want, aside from no overseas transaction fees:
A rewards credit card for travel, cash back, or points. A rewards card can help you earn your way to discounted rates on hotels, flights, and other travel expenses, or it can collect cash back or points to spend in other areas of your life. Travel cards usually don’t have an overseas transaction fee, but that doesn’t necessarily mean such a card is your best option. A recent NerdWallet survey determined that for many travelers, cash back credit cards may be better than travel credit cards.
A balance transfer credit card. A balance transfer card allows consumers to reduce their interest payments by consolidating their debt on a lower interest rate card (usually with a fee corresponding to a percentage of the amount transferred). However, if your goal is to pay off your balances, you don’t want to accumulate additional debt on international adventures. Make sure you only spend what you can responsibly pay each month on top of paying off your old balances.
A secure credit card. Secured credit cards require a cash deposit, which will usually be equal to your debt limit on the card. For example, you can give a card issuer $ 200 to receive a credit card with a limit of $ 200 in return. If you are unable to repay your balance, the issuer may keep your deposit. Secured credit cards can often be a first step towards starting a credit history or repairing your credit score after suffering a major negative rating (such as bankruptcy or foreclosure).
A student credit card. Student credit cards are generally aimed at young people who are just starting out on their credit history. Cards with no overseas transaction fees can be useful for students traveling overseas.
International adventures can be hectic, making it difficult to keep track of everything that is going on with your finances, especially when working with a different currency system. When selecting and using your credit card, remember the following:
Cash advance fees can be expensive. You may find yourself in a part of the world where money is king. However, if you use your credit card to withdraw money from ATMs, you’ll typically be charged up to 5% of each transaction, and interest – which starts accruing immediately – can be over 20%. . You will want to pay it back as soon as possible.
Mistrust Dynamic currency conversion. This happens when some merchants offer international travelers the option to have their purchases translated into their original currency at the point of sale in the store, which incurs a fee. DCC rates and charges can be expensive; they are separate from foreign transaction fees. You can avoid both by denying DCC and using a card that doesn’t charge any overseas transaction fees.
Inform your transmitter of your trip. Let your credit card issuer know about your travel plans before you leave. Otherwise, your charges abroad may cause the issuer to believe your card has been stolen and freeze your spending.
Put it all together
You don’t need a good credit score to get a card that saves you the expense of overseas transactions. As with any credit card, you should research the options that best suit your goals. Some cards will help you relieve your debt, while others will reward you for your spending. The best option depends on your situation.