credit card foreign transaction fee
A fee typically 1-3% charged on purchases made in foreign currencies or processed outside the US.
Example
“Switching to a no-foreign-transaction-fee card saved her $180 on the international trip.”
Memory Tip
FOREIGN FEE — 3% adds up fast internationally. Get a no-fee card for travel.
Why It Matters
Understanding foreign transaction fees helps you minimize unnecessary costs when traveling internationally or making purchases from foreign merchants. These fees can add up quickly on multiple transactions and significantly increase the true cost of your purchases abroad, making it important to choose a card with low or no foreign transaction fees if you travel frequently.
Common Misconception
Many people believe that foreign transaction fees only apply when they physically travel to another country. In reality, you can be charged this fee even while staying at home if you make an online purchase from a foreign retailer or if a US merchant processes your transaction through a foreign payment network.
In Practice
Imagine you are traveling in Japan and make a purchase of 10,000 yen which equals about 67 dollars. If your credit card charges a 3 percent foreign transaction fee, you would pay an additional 2.01 dollars on that single transaction. Over a two-week trip with ten purchases, those fees could total 20 dollars or more in unnecessary charges.
Etymology
Modern credit card fee term — the cost of international transactions.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
Other credit terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.