There’s no doubt that traveling abroad can be expensive. Accounting for expenses including airfare, hotel stays, meals and excursions, you’ll need to budget and save for a big trip so you don’t rack up debt.
In addition to these more obvious expenses, there is another potential cost of international travel you may not be aware of: foreign transaction fees. These fees can add up, so it’s important to understand how they work and how to avoid them.
[See: Best High-Yield Savings Accounts]
What Fees Can You Be Charged When Traveling Internationally?
There are a few fees you may have to pay when making purchases outside of the U.S. Collectively, they’re considered foreign transaction fees, although specific types of fees are charged in different situations. It’s important to know when certain fees apply.
Foreign Transaction Fees
A foreign transaction fee is a charge that your credit card issuer or bank adds to your bill when you use your credit or debit card to make a purchase in a foreign currency. This fee is usually a percentage of the purchase amount and typically around 1% to 3%. For example, if you make a $100 purchase while traveling abroad and your foreign transaction fee is 3%, you’ll pay an extra $3, which will show up as a separate line item on your bill.
Foreign transaction fees can apply to all kinds of transactions made abroad, including those at restaurants, hotels and retailers. “You may also incur this fee when making online purchases from companies that are based overseas,” says Scott Lieberman, founder of personal finance website TouchdownMoney.com and extensive international traveler.
It’s important to note that not all cards impose these fees. Some cards are specifically designed for international travel and don’t charge foreign transaction fees.
[Read: Best No Foreign Transaction Fee Credit Cards.]
Dynamic Currency Conversion Fees
Your credit card or debit card issuer, payment network or ATM network may charge this fee for converting one currency to another
. It isn’t the same as a foreign transaction fee, but your card issuer or bank may roll the dynamic currency conversion fee into the total foreign transaction fee. Typically, a DCC fee is around 1% of the transaction amount.
You have a choice when it comes to paying a DCC fee. Merchants usually aren’t allowed to perform a currency conversion without your consent. For example, say you’re shopping in London and want to buy a gift for 125 euros, but you aren’t sure what that would cost you in U.S. dollars. The merchant may offer to perform a DCC and allow you to pay in your home currency, but you can decline this service and pay in euros to avoid the fee. Depending on your payment method, however, you may still have to pay the foreign transaction fee.
International ATM Fees
There are a few fees to be aware of when withdrawing money from an ATM abroad. You might have to pay a DCC fee to convert the transaction from your home currency to the local currency (or the ATM operator may give you a bad conversion rate). Your bank may charge a foreign transaction fee, even if you’re using an in-network ATM. If you’re using an ATM that is outside of your bank’s network, you may pay an additional out-of-network ATM fee. Finally, the ATM operator could charge you a fee for using its machine.
[Read: Best Travel Rewards Credit Cards.]
Banks With No Foreign Transaction Debit Card or ATM Fees
Many credit card issuers offer cards with no foreign transaction fees. Debit cards with no foreign transaction fees are less common, but they do exist.
| Institution | Details |
| JPMorgan Chase | With a Chase Premier Plus Checking Account, you are refunded the $5 ATM withdrawal charge up to four times. |
| Capital One | Capital One’s 360 products, including its checking account, charge no additional fees when you use your debit card abroad. |
| Charles Schwab | The Schwab Bank Investor Checking account charges no foreign transaction fees and offers unlimited ATM fee rebates. |
| Discover | There is no foreign transaction fee for its debit card, and Discover has a non-fee agreement with more than 60,000 ATMs worldwide. |
| HSBC | HSBC’s Premier Checking Account charges no foreign transaction fees worldwide when using the HSBC Premier Debit World Mastercard. |
| Varo Bank | You won’t pay a foreign transaction fee anywhere Visa is accepted, except in blocked countries including Russia, Indonesia and some Middle Eastern and African countries. |
Foreign Transaction Fees by Bank
If you’re planning to travel internationally, it’s a good idea to review your debit cards and determine what types of fees you may incur on foreign transactions.
The following is a look at debit card and ATM foreign transaction fees for many of the largest banks in the country.
| Institution | Details |
| JPMorgan Chase | Foreign ATM: 3% of transaction or $5, whichever is greater. Foreign Transactions: 3% |
| Bank of America | Foreign ATM: 3% plus $5 usage fee for non-Bank of America ATM. Foreign Transactions: 3% |
| Citibank | Foreign ATM: 2.75% for non-Citibank ATMs. Foreign Transactions: 2.75% |
| Wells Fargo | Foreign ATM: $5 Foreign Transactions: 3% |
| U.S. Bank | Foreign ATM: $2.50 plus 3% of transaction amount. Foreign Transactions: 3% |
| PNC Bank | Foreign ATM: $5 Foreign Transactions: 3% |
| Truist | Foreign ATM: $5 Foreign Transactions: 3% |
| Capital One | 360 products: No foreign transaction or ATM fees. Non-360 products: Foreign ATM charges $2 plus 3% of the total transaction amount. |
| TD Bank | Foreign Transactions/ATM: 3% |
| Citizens Bank | Foreign Transactions/ATM: 3% |
| Fifth Third Bank | Foreign Transactions/ATM: 3% |
| Key Bank | Foreign ATM: $3 Foreign Transactions: 3% |
| Huntington National Bank | Foreign Transactions/ATM: 3% |
| Ally Bank | Foreign Transactions/ATM: 1% |
| BMO Bank | Foreign Transactions/ATM: 2.8% |
| HSBC Bank | Foreign ATM: None Foreign Transactions: 3% |
The Right Way to Use Your Debit Card Abroad
Lieberman advises against using a debit card for purchases when traveling outside of the U.S. “Try to use cash or a credit card,” he says. “Credit cards offer more consumer protections than debit cards.”
Even so, there may be instances when you can’t avoid using your debit card. In those cases, consider these tips to save money on fees.
— Use a bank that doesn’t charge foreign transaction fees. Ideally, you have a checking account that doesn’t charge foreign transaction fees or it reimburses you for them. If not and you have a big trip coming up, it may be worth opening a new account.
— Use a Global ATM Alliance bank. Some banks, including Barclays, Scotiabank and Bank of America, are part of the Global ATM Alliance, which allows customers to use ATMs of other alliance banks throughout the world without paying out-of-network fees.
— Withdraw larger amounts less frequently. If your bank charges a flat fee to use a foreign ATM, consider withdrawing larger amounts of money less frequently rather than making multiple smaller withdrawals.
— Decline currency conversions: When making purchases with your debit card or withdrawing from an ATM abroad, you may be asked if you want the transaction to be converted into your home currency. It’s typically best to decline, as the exchange rate provided by your bank will usually be better.
contributed to the reporting for this article.
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Foreign Transaction Fees by Bank originally appeared on usnews.com
