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Savvy Saturday: Avoid foreign transaction fees while in the US

The Points Guy logo The Points Guy 9/18/2021 Joseph Hostetler
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Editor’s note: Some travel cards come with perplexing benefits that are tricky to maximize. This article is part of a series that shows you unique, fun and unintended ways to use your credit card benefits. If you’ve got any questions or have an example of a surprising way to maximize a credit card perk, tweet us @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

This is more of a “Did you know?” sort of topic, but it can save you potentially hundreds of dollars in a single transaction.

You’ve probably heard of foreign transaction fees. They’re arbitrary fees (usually around 3% of the charged amount) your credit card issuer imposes for using your card internationally. Swipe your card at a taco truck in Tijuana, Mexico, and you could be charged 3% more than had you purchased the same taco 100 feet north in San Diego.

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But did you know that you can be charged a foreign transaction fee even if your feet are planted in the middle of Kansas? It may have already happened to you and you simply didn’t notice.

The secret: Credit cards with no foreign transaction fee

a person sitting at a table using a laptop: If you’re making purchases on the internet, you could be charged a foreign transaction fee. (Photo by Oscar Wong/Getty Images) © The Points Guy If you’re making purchases on the internet, you could be charged a foreign transaction fee. (Photo by Oscar Wong/Getty Images)

In truth, your credit card isn’t particular about your actual geographical location. It’s more about the location where your credit card transaction is processed.

If you’re buying products online, reserving a hotel room, purchasing a flight, etc., you may be charged a foreign transaction fee. You can often sniff out the fee before making your purchase, however. Here are a few telltale signs:

  • Your purchase is from a foreign country.
  • You make a purchase from a site whose default language is not English.
  • Your purchase is in a foreign currency.

When you prompt a transaction with a merchant outside the U.S., your purchase may be categorized as “foreign,” despite the fact that you’re sitting in your living room. You may even be purchasing from a U.S.-based website that deals with overseas vendors and still fall victim to the 3% fee (Amazon has been known for this).

Early in my credit card career, I was burned by foreign transaction fees while sitting in front of my computer. I was booking travel on a foreign airline website, using the native site and paying in the local currency (some airlines charge less if you use the native site instead of the “U.S. version”). It doesn’t happen anymore, because I almost exclusively use cards that waive foreign transaction fees. Here are some of our favorites:

  • Chase Sapphire Preferred Card.
  • Chase Sapphire Reserve.
  • Capital One Venture Rewards Credit Card.
  • The Platinum Card® from American Express (see rates and fees).

If you’re using any sort of travel credit card, your foreign transaction fees are almost certainly waived. If you’re new to the credit card world, there are also plenty of no-annual-fee credit cards that waive foreign transaction fees, too:

  • Hilton Honors American Express Card (see rates and fees).
  • Capital One Quicksilver Cash Rewards Credit Card.
  • Capital One VentureOne Rewards Credit Card.
  • Bank of America® Travel Rewards credit card.

Bottom line

Just because you’re in the U.S. doesn’t mean you won’t be charged foreign transaction fees. If you’re making purchases on the internet, there’s a possibility you’ll get dinged.

Whether you’re buying products from an offshore company, reserving hotels overseas or booking a flight on a foreign airline, the safe bet is to use a credit card that waives foreign transaction fees because 3% in fees can add up in a hurry.

For rates and fees of the Amex Platinum card, click here.

For rates and fees of the Hilton Honors Amex card, click here.

Featured photo by Westend61/Getty Images.

SPONSORED: With states reopening, enjoying a meal from a restaurant no longer just means curbside pickup.

And when you do spend on dining, you should use a credit card that will maximize your rewards and potentially even score special discounts. Thanks to temporary card bonuses and changes due to coronavirus, you may even be able to score a meal at your favorite restaurant for free. 

These are the best credit cards for dining out, taking out, and ordering in to maximize every meal purchase.

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Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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