USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

New card options let travelers avoid foreign transaction fees

By

Cashing In
Cashing In columnist Cathleen McCarthy
Cathleen McCarthy is a journalist whose articles on travel, commerce and consumer topics have appeared in dozens of publications. She writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com

Ask a question.

'Cashing In' archive

Question for the CreditCards.com expert Dear Cashing In,
I'm taking a trip to Japan, my first trip out of the country in a long time. I'd like to rack up some rewards on at least one of my credit cards for this trip but I'd also like to keep fees to a minimum. I was planning to rely on my Delta American Express and Chase Freedom cards but it looks like both charge small foreign exchange fees. Is it really enough to worry about? -- Karen

Answer for the CreditCards.com expert Dear Karen,
Those foreign transaction fees can definitely add up, so it's smart to avoid them if possible. Neither of the cards you mentioned will allow you to do that.

How do they add up? Let's say you you're in Japan for a week, use your Chase Freedom card to get cash from Tokyo ATM machines, and charge $500 per day on hotels, meals, shopping and transportation. The 3 percent foreign transaction fee on that card would add $105 to the $3,500 of overseas charges on your credit card bill. With a no-fee card, you could spend that cash on sushi instead.                     

Speaking from experience, there's nothing more annoying than budgeting carefully for a trip only to return home and find unexpected fees on your credit card bill for every transaction you made. Talk about post-vacation letdown.

American Express charges a foreign transaction fee on all but a few high-annual-fee cards, including Platinum and Centurion. Using your Delta card will mean an extra 2.7 percent on every transaction you make outside the U.S. -- slightly better than your Freedom card's 3 percent but not much. 

Waived foreign transaction fees are an incentive for AmEx to attract high rollers who spend a lot overseas. That particular incentive is becoming less special as other issuers remove those fees from more accessible cards.

Neither Capital One nor Discover charge foreign transaction fees. Chase just waived the 3 percent foreign transaction fees on yet another of its rewards cards -- but it wasn't Freedom, it was United Explorer. Chase now has 11 cards without foreign transaction fees -- including, as of June 1, 2013, the Explorer. 

None of the EMV chip cards issued by Chase charge foreign transaction fees, which makes them more attractive to cardholders who travel overseas. Chase is positioning its chip cards as having no foreign transaction fees, which makes me think it may plan to remove foreign transaction fees on cards when (or before) it releases chip versions.

Chase chip cards co-branded with Hyatt, Marriott Rewards, Ritz-Carlton and British Airways charge no foreign transaction fees. Yet the Freedom card does and, up until now, so did the Explorer. 

My guess is United Explorer, which must have a high percentage of overseas travelers, may be preparing to release a chip card. I wouldn't be surprised if other no-fee cards in the Chase portfolio -- Sapphire, Ink, Priority Club Select -- announce a chip option soon.

No telling what will happen on that front, but if I were you, I'd think about adding a chip card to my wallet. Japan has migrated to EMV chip technology, which means you could run into issues with your Freedom and Delta AmEx. If you're going to take on a chip card, I'd find one that waives foreign transaction fees.

See related: More issuers offer credit cards with no foreign transaction fee, 9 tips for traveling with credit cards, Are chip cards necessary for charging overseas?

Meet CreditCards.com's reader Q&A experts
Vexed by a personal finance problem? CreditCards.com's Q&A experts answer questions from readers every weekday. Ask a question, or click on any expert to see their previous answers.
Gary Foreman, New Frugal You columnist Gary Foreman,
"New Frugal You"
Sally Herigstad, To Her Credit columnist Sally Herigstad,
"To Her Credit"
Tony Mecia, Cashing In columnist Tony Mecia,
"Cashing In"
Barry Paperno, Speaking of Credit columnist Barry Paperno,
"Speaking of Credit"
Elaine Pofeldt, Your Business Credit columnist Elaine Pofeldt,
"Your Business Credit"
Erica Sandberg, Opening Credits columnist Erica Sandberg,
"Opening Credits"

Updated: August 28, 2013



Join the discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Three most recent Cashing In stories:
  • Best way to track all those reward points? – How do you make sure you really earned triple points on gas purchases on Card A and the miles you were supposed to when using Card B's online shopping portal? There are no easy answers ...
  • Even with high credit score, some card applicants rejected – How can someone with an 800+ FICO score be denied a new credit card? It may have to do with rewards card churning but the first thing to do is ask the issuer that is denying your application ...
  • Using rewards to buy a new car – Some credit cards earn you rewards that can be used as an auto down payment, but consider alternatives such as cash-back cards, too ...

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 10-24-2014

National Average 15.07%
Low Interest 10.37%
Business 12.80%
Balance Transfer 12.82%
Student 13.14%
Cash Back 14.98%
Reward 15.05%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

ADVERTISEMENT
ADVERTISEMENT