credit card foreign transaction fees
Fees of typically 1-3% charged on purchases made in foreign currencies or processed by foreign banks.
Example
“Switching to a no-foreign-transaction-fee card saved her $340 on a three-week international trip.”
Memory Tip
NO-FTF CARDS — travel credit cards waive foreign transaction fees. Essential for international trips.
Why It Matters
Credit card foreign transaction fees can significantly increase the cost of international travel, online shopping from foreign retailers, and business expenses abroad. Understanding these fees helps you choose the right credit card for your lifestyle and avoid unexpected charges that can add up quickly on multiple purchases.
Common Misconception
Many people believe foreign transaction fees only apply when they physically travel to another country, but fees are also charged when making online purchases from foreign websites or when a U.S. merchant processes a transaction through a foreign bank, even if you are shopping from home.
In Practice
If you purchase a camera from a Japanese retailer for 50,000 yen while on vacation, and your credit card charges a 2.5% foreign transaction fee, you would pay an extra 1,250 yen (approximately 8-10 dollars) on top of the purchase price. Over a two-week trip with multiple purchases totaling 500,000 yen, foreign transaction fees could easily amount to 100-150 dollars in unnecessary charges.
Etymology
Modern credit card fee structure — the cost of using credit cards internationally.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
Other credit terms you should know
See Also
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