Do you frequently travel overseas, and are sick of getting hit with extra fees just for using your credit card? Perhaps you make a lot of online purchases from overseas retailers and want to stop paying extra?
Whatever your reason, foreign transaction fees are a frustrating part of overseas transactions. Here’s what you need to know about credit cards with no foreign transaction fees.
What are foreign transaction fees?
Foreign transaction fees are an additional amount charged to your credit card when you make a purchase outside of Australia. You will usually notice this as an additional fee of 2 or 3 per cent, depending on your bank and credit card. The purpose, or justification, for this fee is that it covers the cost of the bank and credit card company to process a foreign transaction.
Are foreign transaction fees the same as currency conversion fees?
No. Foreign transaction fees are charged on transactions that are processed outside Australia. Currency conversion fees are charged in order to convert a foreign currency to Australian dollars.
For example, if you are shopping with an overseas online retailer and being charged in Australian dollars, you won’t be charged a currency conversion fee, but you could be charged a foreign transaction fee. If that same retailer was also charging you in a foreign currency, you could be charged both a foreign transaction fee and a currency conversion fee.
How do I avoid paying foreign transaction fees?
These fees apply not only to credit cards, but bank accounts too. It’s unlikely that your bank account has no foreign transaction fees, so if you want to avoid paying extra on your overseas purchases, you can shop around for a credit card that waives these fees.
How do I find a credit card with no foreign transaction fees?
When searching for a credit card of this type, it’s best to look out for credit cards with “no overseas charges” or “no international fees”.
Credit cards with no foreign transaction fees will usually come bundled with other travel rewards, such as low or no currency conversion fees and overseas ATM charges. These credit cards are designed to appeal to consumers as a ‘travel credit card’.
You will need to read the fine print when comparing credit cards, to make sure that they actually do not charge a foreign transaction fee. Even credit cards without foreign transaction fees can have other, hidden, fees for overseas purchases, such as currency conversions and ATM withdrawals.
Is a credit card with no foreign transaction fees right for me?
If you frequently make purchases from overseas retailers – whether due to travel, or online shopping – it’s always a good idea to keep your fees as low as possible. But make sure that the credit card you choose won’t also be charging you hidden fees for currency conversions or ATM withdrawals. These fees could easily cancel out any savings you’ve made from avoiding foreign transaction fees.
As with all credit cards, make sure that you can also afford (or justify) the annual fee and the interest rate. If everything adds up, you may have just found a credit card that could help you save.