Foreign Transaction Fees: What If I Book My Overseas Hotel on a US Site?
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If your credit card charges foreign transaction fees, it means you'll be charged extra — often around 3% of the transaction — when you purchase something abroad. For example, if you used your card in Rome to stay at a fancy villa for 10 nights at a cost of $400 a night, you'd not only owe $4,000, but also $120 on top of that in foreign transaction fees.
But can you dodge the fee on that Italian villa if you book it ahead of time through a U.S.-based travel site? Not necessarily. That foreign transaction fee may still kick in, even if you're planted on the couch stateside when you make your purchase. Sometimes, all roads really do lead to Rome.
The only surefire way to avoid foreign transaction fees is to use credit cards that don't charge foreign transaction fees in the first place. Here's why.
Why you (probably) can't game the system
Whether you're charged a foreign transaction fee ultimately comes down to where the transaction is processed. If it is processed in the U.S., you won't be charged the fee. If it is processed in a foreign country, you'll likely pay it. Unfortunately, there's no way of knowing how your credit card company will process a transaction like booking an international hotel on a U.S. travel site.
Some travel websites offer a disclaimer that hints at whether you'll be charged. For example, Expedia says in part:
"Some banks and credit card companies impose fees for international or cross border transactions. For instance, if you are making a booking using a US-issued card with a non-US merchant, your bank may charge you a cross border or international transaction fee. Furthermore, booking international travel may be considered an international transaction by your bank or card company, since we may pass your card details to an international travel supplier to be charged."
However, other sites might not mention it at all.
So, you might be able to skirt the fee, but it's safest to assume that the credit card company will ding you. After all, fees are partly how credit card issuers make money.
How to avoid the fee no matter how you book
The only certain way to avoid foreign transaction fees is to get a credit card that doesn't charge them. Most travel credit cards — at least the good ones — won't charge this fee, whether they're general travel cards or airline-specific — e.g., Delta SkyMiles® Gold American Express Card (Terms apply) (see rates and fees).
The Chase Sapphire Preferred® Card, for instance, charges no foreign transaction fee and earns bonus rewards in a variety of popular spending categories, including dining and travel. The ongoing APR is 21.49%-28.49% Variable APR, and it has a $95 annual fee. It also comes with a sizable sign-up bonus: Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.
So, you could book that Italian villa three months ahead of time to meet the spending requirement and then use the sign-up bonus while on vacation.
All that said, if you're determined to use one of the cards already in your wallet, you'll want to review its terms and conditions. Check the Schumer box on the credit card issuer’s site to find out whether your card carries the fee and, if so, what the percentage is. If you can't find the information, you can also call the credit card company to ask. You'll want to do this before booking any international travel, including hotels, flights, cruises, rental cars and more.
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