A foreign transaction fee, also called an FX fee, is a charge applied when you make a purchase in a foreign currency or use your card outside your home country. The fee covers the cost of currency conversion and is usually a percentage of the transaction amount.
How It Works
Most banks and credit card issuers charge between 2% and 3% of the converted transaction amount. For example, a $1,000 purchase abroad could cost an extra $20–$30 in FX fees.
Ways to Avoid It
- Use no-FX-fee cards: Some credit cards waive foreign transaction fees as a perk.
- Choose the right currency: Always pay in local currency when given the choice to avoid hidden conversion fees.
- Consider travel accounts: Multi-currency accounts and prepaid travel cards can reduce costs abroad.
Final Thoughts
Foreign transaction fees may seem small but can add up quickly for frequent travelers. Using the right card or account can help avoid these extra costs.