Foreign Transaction Fees Can Happen Even When You’re Not Traveling

You can end up paying foreign transaction fees even when you're shopping from home.

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When you buy something on an international trip, it might cost you more than just the price tag plus tax. Some credit cards charge a foreign transaction fee on non-U.S. purchases — usually about 3% of the total cost of the purchase, which can add up over the course of a trip abroad.

In fact, it can accrue without you even having to leave your house. Here's why.

You don’t necessarily need to be abroad to be shopping abroad

Thanks to online shopping, it’s easy to make purchases with foreign merchants while safely at home in the U.S. And your credit card company doesn’t care where you’re physically located when you use your card — what matters is where the retailer is stationed.

Sometimes it’s clear whether online merchants are based overseas, but sometimes it’s not. If the website doesn't make it obvious, you could get slapped with an unexpected fee on your credit card bill. A 3% fee on an article of clothing may not be too painful, but a 3% fee on a multi-thousand-dollar vacation package? That could sting.

Nerdy tip: Credit card payment networks may also charge a currency conversion fee, for converting a foreign currency into U.S. dollars. This is not the same thing as a foreign transaction fee.

What to do if you're charged a foreign transaction fee unwittingly

Foreign transaction fees will show up on your bill at the end of the month, so make sure you scrutinize your credit card statement carefully each month to be sure you’re not getting hit with such fees unsuspectingly.

If you see a fee you weren't expecting, call your issuer to investigate. You may have bought something online from a foreign retailer and didn’t even realize it.

You could consider asking your issuer to reverse the fee, especially if there was no indication that the merchant was based outside the U.S.

How to avoid foreign transaction fees once and for all

Fortunately, there's a sure-fire way to dodge this annoyance: Opt for a credit card that carries no foreign transaction fees. (You can tell by consulting a card's terms and conditions, which must list any such fees.)

Most good travel credit cards don't charge foreign transaction fees. And while they're more common on cash-back credit cards, it's possible to find ones that skip it. Capital One and Discover, for instance, do not charge foreign transaction fees on any of their cards.

Discover cards aren't always the best choice for international travelers because of spotty acceptance overseas. But if you’re planning to do your shopping at home, the Discover it® Cash Back is a good choice. You’ll earn 5% cash back in rotating quarterly bonus categories (up to $1,500 in combined spending per quarter) and 1% cash back on all other purchases. Activation is required quarterly to earn the higher rate.

Plus, the Discover it® Cash Back carries an annual fee of $0.

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