Why Do I Get Charged an International Transaction Fee?

If you are traveling abroad, online shopping, or conducting other transactions, you may get hit with an international transaction fee.

What Is an International Transaction Fee?

Consumers will likely encounter a range of bank fees, one of which may be an international transaction fee. In our increasingly global world, international transaction fees are more common.

These fees are charged on transactions that pass through a foreign bank. With so much commerce being conducted online and overseas, you may likely have made a purchase that passed through a foreign bank. 

You may encounter foreign transaction fees on ATM transactions, purchases you make while abroad, and purchases you make from businesses abroad.

These international transaction fees can vary in amount. The average international transaction fee is 3%, notes CreditCards.com. However, they can have multiple parts, and it is important to be informed about where the charges are coming from.

Value Penguin explains that largely, these fees have two parts. Both the credit card network and the the bank that issued you your card, in other words the bank that holds your accounts, charge fees. There may be a third part to the fee — a charge that your bank might tack onto their fee. However, some banks will not add on an additional charge.

Foreign transaction fees are different from foreign ATM fees, stresses Nerd Wallet. Even if you avoid foreign transaction fees on your credit or debit cards, getting cash from an ATM abroad could still stick you with a fee.

Can Online Shopping Trigger an International Transaction Fee?

Today, technological advances have allowed customers to do businesses with businesses around the world. Often, this includes online shopping. Value Penguin explains that just a decade ago, only transactions conducted on foreign soil incurred a foreign transaction fees. Now, purchases may come with a foreign transaction fee even if they pass through a foreign bank. This means that online shopping may very well incur a foreign transaction fee.

Unfortunately, foreign exchange fees can be challenging to identify in an online shopping scenario. Even if the company you are doing business with lists their prices in US dollars, you could still incur a foreign transaction fee. 

How to Avoid an International Transaction Fee

The best way to avoid an international transaction fee is to try to bank with a financial institution that does not charge these fees at all, has forgiving policies around them, or does not charge them frequently. This will give you flexibility when you need it. Doing your research ahead of time will help you identify the best card or bank for you, and help you know what to expect.

Banks and credit unions make significant profits off of the fees that they charge, and international transaction fees are no exception. International transaction fees may be hard to spot, which means you may be being charged these fees without your knowledge. 

Some banks may try to hide international transaction fees with confusing language in your contract, by burying terms in the fine print or making the wording of their international transaction fees misleading. 

Additionally, these fees may still be hard to spot even after you have already been charged. Scan your bank statements for fees with labels like “FX fee.” In some cases, banks refer to international transaction fees, or foreign transactions, with terms like this.

Value Penguin does warn customers that their bank statements may be confusing for more than one reason while they travel abroad. Your purchases may be made in a foreign currency, and then converted to US dollars, for example. The exchange rate for various currencies can go up and down. If you are surprised about the amount of a charge, and you already know what is due to an international exchange fee, a currency exchange rate may be at the root of the issue. 

Value Penguin encourages customers to try to be as informed as possible about their bank fees when choosing a bank. Sometimes, these fees are disclosed in a section of account information called “Pricing and Information,” or similar.

Some banks do not charge these fees at all, or offer waivers to customers as a convenience, says Investopedia. If you can’t identify a bank that does not charge international transaction fees, you may be able to find a credit card that does not come with foreign traction fees.

Capital One is one bank that does not charge international transaction fees — Capital One 360 is one account that does not charge fees when customers use ATMs in other countries, explains Smart Asset. Value Penguin notes that American Express and Barclays offer multiple credit cards with no foreign transaction fees, while Bank of America has at least one card free from foreign transaction fees.

If you are unable to find a bank, credit card, or account that does not come with foreign transaction fees, you are worried about international transaction fees for an upcoming trip, you may want to exchange your currency before you travel. Smart Asset notes that making a budget beforehand to understand how much cash you will need can be the key to success in this strategy.

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.