What is a Foreign Transaction Fee on a Credit Card? 

There are a number of things to consider before spending your money when traveling abroad, including fees you may be charged, such as foreign transaction fees, conversion rates, and currency conversion fees, the latter being something many travelers don’t know about. These fees, however, can be avoided.

What Are Foreign Transaction Fees?

A foreign transaction fee is a charge on every debit or credit card transaction you make while traveling in a foreign country. These fees are a small percentage of the transaction — typically between 1% and 3%— but they can add up quickly if you’re making all of your purchases with a credit card rather than with cash.

Why Was I Charged a Foreign Transaction Fee?

When traveling in a foreign country, take a look at how you’re paying for things.

Have you taken out cash to be used for the majority of your purchases? (As a side note: pickpockets and cutpurses are a very real problem in many places, so be careful where and how you store your cash, such as with a money belt.) You’ll only be charged a foreign transaction fee on a credit card or debit card purchase, not for cash purchases.

Can You Get a Foreign Transaction Fee on a Domestic Purchase?

While foreign transaction fees are mostly associated with traveling abroad, in certain circumstances they may also be charged on domestic purchases. According to Investopedia, any purchase made from a merchant based outside the U.S. can incur a foreign transaction fee —including online purchases.

For instance, if you purchase an item online from Hungary, a foreign transaction fee may be added to the purchase price without your knowledge. One good way to get a hint that you may be hit with such a fee is if the site you’re shopping from shows the prices in a currency other than the U.S. dollar.

In some cases, this may even apply to purchases made from a foreign seller through a U.S. website, such as Amazon. If the seller is based in a foreign country, even if the website they’re selling through is located in the U.S., a fee may still be incurred.

How to Avoid Foreign Transaction Fees

There are ways for travelers to avoid paying a foreign transaction fee on a credit card. A good approach to avoiding these fees is to avoid making unnecessary purchases on your cards. An even better idea is to acquire a credit card that doesn’t charge a foreign transaction fee in the first place.

Which Credit Cards Have No Foreign Transaction Fees?

Most credit cards — about 70 percent — charge foreign transaction fees. However, certain credit cards let you avoid these fees entirely.

Credit cards that don’t charge a foreign transaction fee include:

• Chase Sapphire Reserve
• Capital One Quicksilver Cash Rewards Credit Card
• Capital One Venture Rewards Credit Card
• The Platinum Card from American Express
• American Express Green Card
• Discover it Miles
• Discover it Secured
• United Explorer Card

Before traveling, check to see if your credit card charges a foreign transaction fee. If so, maybe consider getting a card for travel so you can avoid these fees. Typically, travel rewards credit cards don’t charge this fee, but it’s best to double-check.

Can a Foreign Transaction Fee on a Credit Card be Refunded?

If you have made an international purchase either in person or online, you will most likely not receive a refund of the foreign transaction fee if you return your purchased item. This is because in most cases, the card issuing company paid money to process the original purchase with foreign currency, according to US News & World Report. 

Still, if not a lot of time has passed since you made the purchase, you might want to ask if the foreign transaction fee can be refunded, but you would have to request that of the card issuer and not of the merchant.

Is a Foreign Transaction Fee on a Credit Card Legal?

A California woman has filed a class action lawsuit alleging the foreign transaction fee that charged by Navy Federal Credit Union charged to her account was illegal.

Lead plaintiff Siobhan Morrow said she made an online purchase while at her San Diego home, which ended up costing her 1% of the total purchase amount as a foreign transaction fee.

Morrow said the item she bought was from an online retailer that was based out of Cyprus, but that nowhere on the website did it mention the business wasn’t located with the U.S.

In addition, Morrow claims the terms of the credit card indicate “transactions made in foreign countries will be charged 1.0% of the transaction amount.”

The lawsuit alleges that the credit union refers only to transactions “made” in foreign countries and does not say the terms apply to transactions only “processed” in foreign countries, which Morrow says deems her internet purchase immune from such foreign transaction fees.

Filing a Foreign Transaction Fee Lawsuit

If you were charged a foreign transaction fee on a purchase you made from within the U.S. through a foreign website, or from a foreign seller through a U.S. website, you may be able to join this class action lawsuit investigation and pursue compensation.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexity of litigation, and maximize your potential compensation.

Join a Free Foreign Transaction Fees Class Action Lawsuit Investigation

If you were charged a foreign transaction fee on a debit card or credit card purchase made on a foreign website, you may qualify to join this foreign transaction fees class action lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.