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Best Credit Cards With No Foreign Transaction Fees of U.S - December 2023

The Best Credit Cards With No Foreign Transaction Fees are Discover it Cash Back, Capital One VentureOne Rewards, Capital One Quicksilver Cash Rewards, Bank of America Travel Rewards, and more.

by Sai V

Updated Dec 01, 2023

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Best Credit Cards With No Foreign Transaction Fees of U.S - December 2023

Best Credit Cards With No Foreign Transaction Fees of December 2023

When planning international travel, it's crucial to be aware of foreign transaction fees, also known as international transaction fees, which are typically imposed by your credit card issuer and can range from 1% to 3% of your purchase amount, with 3% being a common rate. While this percentage may seem inconsequential, it can add up significantly, as an example of a $3,000 hotel bill could result in an additional charge of $90.

To steer clear of these fees, the most effective strategy is to obtain a travel credit card that does not impose foreign transaction fees. Fortunately, nearly all reputable travel credit cards, including those offered by airlines, refrain from imposing these charges. Notably, major issuers such as Capital One and Discover are recognized for not applying foreign transaction fees to any of their credit cards.

Here are the best credit cards with no foreign transaction fees for December 2023:

Card Name Annual Fee Best For
Discover it® Cash Back $0 Bonus category Variety
Capital One VentureOne Rewards Credit Card $0 Occasional travelers
Capital One Quicksilver Cash Rewards Credit Card $0 Flat-rate cash back
Bank of America® Travel Rewards credit card $0 Intro APR
Chase Sapphire Preferred® Card $95 Redemption value
Discover it® Student Cash Back $0 Students
Capital One Venture Rewards Credit Card $95 Flat-rate travel rewards
Capital One Venture X Rewards Credit Card $395 Annual credits
American Express® Gold Card $250 Dining
The Platinum Card® from American Express $695 Lounge access
Discover it® Miles $0 First-year value
Chase Sapphire Reserve® $550 Luxury perks
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Do Credit Cards Charge Foreign Transaction Fees?

Yes, many credit cards do charge foreign transaction fees when you make purchases outside of the United States. When you embark on international travel and decide to use your credit card for transactions, it is essential to carefully scrutinize your credit card monthly statements. The reason for this vigilance is to be aware of any foreign transaction fees that might be incurred during your travels.

While some credit cards may offer the enticing benefit of waiving foreign transaction fees for the initial year as a promotional perk, it is crucial to remain attentive as these fees could potentially apply once the promotional period concludes. Therefore, it is advisable to stay informed about your credit card's terms and conditions to avoid any unexpected charges while using your card abroad.

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What is the Foreign Transaction Fee?

A foreign transaction fee is a charge imposed by credit card issuers when you use your credit card to make purchases in a foreign country, typically in the local currency. When you buy something overseas, your credit card issuer must convert the foreign currency amount into U.S. dollars to accurately bill you for the transaction.

While this conversion might seem like a routine process from your perspective, credit card issuers incur various expenses associated with international transactions, such as currency conversion fees through foreign banks and related costs. To offset these costs, many credit card issuers impose a foreign transaction fee on purchases made outside the United States.

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How Does a Foreign Transaction Fee Work?

Foreign transaction fees typically amount to approximately 2-3% of each transaction, denominated in U.S. dollars. This fee structure may consist of a 1% fee levied by the payment processor (e.g., MasterCard or Visa) and an additional 2% fee imposed by the card issuer (e.g., Bank of America or Wells Fargo).

Although 3% may not initially appear substantial, these fees can accumulate significantly during an extended trip. For every $1,000 spent, individuals may incur $30 in foreign transaction fees.

It's important to note that some foreign merchants may offer consumers the choice of paying in their own home currency, a practice known as "dynamic currency conversion (DCC)" at the point of sale. However, in most cases, it is more cost-effective to opt for payment in foreign currency, as DCC rates tend not to favor the consumer.

How to Choose the Best Card With No Foreign Transaction Fees?

Selecting the ideal credit card with no foreign transaction fees requires careful consideration to ensure you make the most of your international travel experience. To make an informed choice, it's essential to grasp the mechanics of foreign transaction fees and how to avoid them. Here are key factors to weigh when searching for a credit card that eliminates foreign transaction fees:

  • Base Rewards and Spending Categories: Look for cards that not only waive foreign transaction fees but also offer rewards that align with your spending habits. Consider cards providing bonus rewards in categories that matter most to you. Some of the top no-foreign-transaction-fee cards extend cash-back rewards in popular spending areas, enabling you to earn rewards while traveling.
  • Travel-Related Perks: If you're specifically in the market for a travel credit card, thoroughly examine the array of benefits each card brings to the table. Beyond the absence of foreign transaction fees, premium travel credit cards often furnish additional perks such as trip cancellation insurance, supplemental auto rental coverage, complimentary checked baggage, amenities like Wi-Fi or breakfast, airport lounge access, and other valuable travel-related benefits and protections.
  • Annual Fees: While annual fees are a common feature among mid-tier and premium travel credit cards, it's vital to assess whether the benefits, rewards, and perks offered can offset or surpass the annual fee's cost. Fortunately, there is a selection of credit cards available that do not impose an annual fee while still sparing you from foreign transaction fees. Keep in mind that certain annual-fee cards may be well worth the investment due to their exceptional rewards and features.
  • Additional Fees: Beyond foreign transaction fees, understand what other fees may apply. Some cards may offer a range of consumer-friendly terms, while others may highlight foreign transaction fee waivers as just one of many travel perks. Familiarize yourself with potential charges, including annual fees, late fees, balance transfer fees, cash advance fees, and returned payment fees to make an informed decision.
  • Annual Percentage Rate (APR): Consider the card's annual percentage rate (APR) or interest rate, which plays a crucial role in selecting a no-foreign-transaction-fee card. Some rewards credit cards may feature APRs that are higher than the average, impacting the cost of carrying a balance and making purchases abroad. Ensure you are aware of the applicable interest rates in case you cannot pay your monthly bills in full.

Who Should Get a No-foreign Transaction Fee Credit Card?

A credit card with no foreign transaction fees can be a valuable financial tool for several specific groups of individuals. Here's a breakdown of who should consider obtaining such a card:

The International Voyager

For frequent international travelers, a credit card without foreign transaction fees is a must-have. These fees can add up significantly, costing travelers hundreds of dollars over the course of a year. Opting for a no-foreign-transaction-fee card, such as the Bank of America Travel Rewards Card or the Chase Sapphire Preferred Card (which may have an annual fee but offers rewards), can result in substantial savings. These cards also often feature rewards programs that allow users to earn points or cash back on their travel expenses.

The Online Shopper

Even if you never leave your home, you can still incur foreign transaction fees while shopping online from non-U.S. merchants. These fees apply because the funds still pass through the merchant's foreign bank. To avoid these charges, consider using a no-foreign-transaction-fee credit card like the Capital One Quicksilver Cash Rewards Card, which offers unlimited 1.5% cash back on every purchase, simplifying your online shopping experience.

The Student Traveler

Students planning to study abroad or embark on post-graduate travels should include a no-foreign-transaction-fee credit card in their financial toolkit. The Discover it® Student Cash Back card, for instance, features a $0 annual fee, an impressive rewards rate, and a first-year cash back match. This makes it one of the best options for students looking to build credit while avoiding foreign transaction fees.

The Global Business Traveler

Frequent international business travelers, including business owners, often find foreign transaction fees and unfavorable exchange rates frustrating. The Capital One Venture X Rewards card, with its absence of foreign transaction fees and exceptional rewards for miles on various travel expenses, is an excellent choice for global business travelers. For those seeking a more budget-friendly option, the Capital One Venture Rewards Card offers similar benefits with a lower annual fee.

Best Credit Cards With No Foreign Transaction Fees of December 2023 - FAQs

1. Do all credit cards charge foreign transaction fees?

No, not all credit cards charge foreign transaction fees. Many travel-focused credit cards waive these fees as a cardmember perk.

2. How can I avoid foreign transaction fees while traveling?

To avoid foreign transaction fees, opt for credit cards that do not impose these charges or use cash for purchases in local currency.

3. Will I still incur foreign transaction fees if I shop online from a foreign retailer?

Yes, foreign transaction fees can apply to online purchases made from your home country if the vendor is foreign and processes the transaction in its local currency.

4. Can I use my credit card at non-U.S. retailers without foreign transaction fees?

Yes, if you have a credit card with no foreign transaction fees, you can use it at non-U.S. retailers without incurring additional charges.

5. Are foreign transaction fees the same as currency conversion fees?

No, foreign transaction fees and currency conversion fees are distinct charges that can apply to international purchases, with currency conversion fees being related to choosing to pay in your home currency during a foreign transaction.

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