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How to Avoid Foreign Transaction Fees

4 min read

Last Updated: February 21, 2025

Table of contents

Key Takeaways

Credit cards are a good option for a safer and more convenient experience abroad.
Some credit cards charge you a foreign transaction fee on purchases made abroad or online through an overseas merchant.
Discover credit cards have no foreign transaction fees, which may allow you to save on each international purchase.

When you’re traveling to a foreign country or shopping online with a foreign seller, your credit card can be a big convenience. Credit cards can make shopping easier and safer with a foreign merchant. But after using your card for a transaction in a foreign currency, you might find that your transactions are more expensive than you expected.

This may be because your credit card has added a foreign transaction fee to the purchase. These charges can add up quickly, so it helps to know how to avoid foreign transaction fees.

What is a foreign transaction fee?

A foreign transaction fee is a surcharge that you pay for transactions in a foreign currency. Why? A foreign transaction fee covers the cost of converting currency. It’s usually around 1–3% of the total transaction cost.

Foreign transaction fees may apply when you shop while traveling abroad or online from a seller outside the United States, regardless of what you buy. You may have a card issuer, like Discover, that has no foreign transaction fee.

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Foreign transaction fees may differ from one card or lender to the next, like an ATM fee often varies across banks. It may seem insignificant at face value, but when you consider the number of transactions you might have on a typical vacation day, the costs add up quickly.

You might pay for two meals, transportation, and some sort of activity, as well as shopping for souvenirs and gifts. If your vacation already costs you thousands of dollars, foreign transaction fees could make a big dent in your budget.

How do foreign transaction fees work?

If your credit card issuer or financial institution charges foreign transaction fees, the fee applies to every credit or debit card payment you make outside the United States, including any purchase you make during layovers. It could also apply to an international purchase you make online with a foreign merchant.

The good news for travelers is that not all credit cards charge foreign transaction fees. You can check your card’s terms and conditions to see if your card charges foreign transaction fees and, if so, what the fee percentage is. Discover Card is accepted at millions of places around the world¹ and has no foreign transaction fee.

How to avoid paying foreign transaction fees

If you have an international vacation coming up or just want to make a purchase from an overseas seller, it may help to know a few tips for avoiding foreign transaction fees. The easiest way is to apply for a credit card without foreign transaction fees, but there are alternatives if that doesn’t work for you.

Did you know?

When you’re researching credit cards, try looking for a card that combines multiple benefits, like rewards and minimal fees. Discover has no annual fee on any card. So, in addition to saving on transaction fees, you also save on annual fees.

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Pay with cash

Some travelers may opt for a cash-only approach, but this has its own drawbacks. You could lose your cash or have it stolen. Lost cash usually has no recourse to replace it. Additionally, withdrawing cash from your checking account or savings account abroad can be costly thanks to currency conversion fees or withdrawal fees at foreign ATMs. Credit cards are not only safe and easy to travel with, but they also offer fraud protection if they're lost or stolen.

Pay in the local currency

Some merchants may give you the option to pay either in their local currency or your own home currency.

It may seem convenient to pay in the currency you’re more comfortable with, but it’s usually a better idea to pay in the local currency. This is because the merchant accepting your home currency payment may charge an additional fee for a process known as dynamic currency conversion (DCC). DCC converts the foreign currency rate to your local rate, so you know what you're spending in U.S. dollars. This may sound great at first, but the DCC fee may be on top of the foreign transaction fee you’re already paying, making the transaction even more expensive.

The bottom line

For those who enjoy trips abroad or shopping online from other countries, a credit card with no foreign transaction fees can be a convenient option for payments. A credit card company like Discover may also allow you to earn rewards on your international transactions. With the right credit card, you can save as well as make the most of every purchase even when you’re abroad.

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