Foreign transaction fees explained: How to spot and avoid them
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Key takeaways
A foreign transaction fee is charged when a payment is made in a foreign currency or through a foreign bank.
It’s a card-level charge, separate from any transfer fee or exchange rate applied by a money transfer provider.
Not all cards charge this fee, and some are specifically marketed as not charging it.
For senders funding an international transfer with a card, this fee can add an unexpected cost on top of the transfer’s own pricing.
Checking a specific card’s terms before relying on it for regular international payments avoids a recurring, avoidable cost.
A foreign transaction fee is a charge applied when a payment is made in a foreign currency or through a foreign bank. Here’s when it applies, and how to avoid paying it when sending money internationally.
What is a foreign transaction fee?
A foreign transaction fee is a charge some card issuers apply when a transaction is processed in a foreign currency or routed through a foreign bank, separate from any charge applied by a merchant or a money transfer provider. It’s a card-level fee tied to how the issuer classifies the transaction, not something charged by every card or every issuer.
Why foreign transaction fees matter for international transfers
Most content covering this fee is aimed at travelers making purchases abroad, but it applies just as directly to senders funding a transfer:
It can apply even to a domestic transaction with an international component. Funding a transfer with a card can sometimes trigger this fee depending on how the transaction is processed and coded by the issuer.
Not every card charges it. Some cards are specifically designed without a foreign transaction fee, making them a better fit for frequent international use.
It’s separate from the transfer’s own cost. A foreign transaction fee is charged by the card issuer, distinct from any transaction fee or exchange rate margin applied by the money transfer provider itself.
How to avoid foreign transaction fees
Check a card’s terms before relying on it internationally. The cardholder agreement will specify whether this fee applies and at what rate.
Consider a card marketed as having no foreign transaction fee, when funding international transfers regularly.
Fund transfers with a bank account instead, where this specific card-level fee doesn’t apply at all.
Foreign transaction fees and international money transfers
Booking travel or making other purchases priced in a different currency(opens in new window) triggers the same foreign transaction fee considerations that apply to funding a money transfer with a card, since an issuer doesn’t distinguish between the two use cases when deciding whether to apply the fee.
The CFPB’s remittance transfer rules(opens in new window) require money transfer providers to disclose the fees and exchange rate specific to the transfer itself, but a card-level foreign transaction fee charged by a bank or card issuer is separate from that disclosure and worth checking independently.
How a foreign transaction fee is actually calculated
A foreign transaction fee is typically calculated as a percentage of the transaction amount, applied at the moment the transaction is converted and processed, regardless of whether the card is being used physically abroad or for an online purchase from a merchant based in another country while at home. This means even a domestic-feeling online purchase, buying from an international retailer’s website, for example, can trigger the fee if the merchant processes payments in a foreign currency or is based outside the card issuer’s home country, which sometimes surprises cardholders who assumed the fee only applied to in-person spending while traveling.
Checking whether your specific card charges this fee
Not every card charges a foreign transaction fee, and many cards marketed toward frequent travelers specifically waive it as a competitive feature. The clearest way to check is reviewing a card’s terms and conditions document, sometimes called a Schedule of Fees, or contacting the issuer directly and asking specifically whether foreign transaction fees apply to that card. Planning to fund an international transfer regularly using a specific card means confirming this detail in advance, rather than discovering it after the first transaction, helps in accurately budgeting for the true cost of using that particular card for this purpose.
Common questions about foreign transaction fees
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Does every debit or credit card charge a foreign transaction fee?
No. Some cards charge this fee, often around a small percentage of the transaction, while others are specifically designed without one. Checking a specific cardholder agreement is the only reliable way to know whether a card applies this fee.
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Is a foreign transaction fee the same as the exchange rate margin on my transfer?
No, these are separate costs from different parties. The foreign transaction fee is charged by a card issuer for processing a foreign transaction, while the exchange rate margin is applied by the money transfer provider during currency conversion. Both can apply to the same transfer, adding to the total cost.
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How can I tell if a foreign transaction fee was charged on my transfer?
Checking a card statement for a separate line item, often listed alongside or near the original transaction, describing a foreign transaction or international fee, is the first step. If unsure, contacting the card issuer directly clarifies whether and how much was charged.
In Summary
A foreign transaction fee is a card-level cost that’s separate from anything a money transfer provider charges, and understanding it helps in avoiding an unexpected addition to the total transfer cost. Checking a specific card’s terms, or funding transfers through a bank account instead, are both reasonable ways to sidestep this fee.
This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant, or otherwise guarantee that the content is accurate, complete, or up to date.