A no foreign transaction fee credit card can be a money saver when traveling overseas or buying items on overseas websites.
Not everyone is aware that the majority of credit cards actually charge a foreign transaction fee of 2 to 4% for each transaction amount.
You can use sites like Kredmo to see what no foreign transaction fee credit cards are in the market.
Click on links below to view and compare credit cards with no overseas transaction fees:
What is considered a foreign transaction
A foreign transaction is any transaction made with an overseas merchant or retailer. Thus, purchases made overseas or online with an overseas merchant made on a credit card will be charged a foreign transaction fee.
Some retailers overseas or online may provide an option to pay in your local currency. In this case, if an overseas retailer or vendor allows payment in AUD, you still will be charged a foreign transaction fee. However, in this case you avoid the charge of a currency conversion fee.
How beneficial is a no foreign transaction fee credit card
A transaction fee charge between 2 to 4% may seem harmless. These fees can mount up on a spending frenzy travelling overseas or shopping on eBay or Amazon international.
For example, on holiday if you spend $5,000 on your credit card in a single month. A 3% fee will add up to $150 in overseas transaction fees. That's a large enough fee in one month that can make you go hmmm. It's a fee that could be avoided.
Tip: Weigh up the annual fee. When searching for a no foregign transaction fee card you'll find that most have an annual fee cost. It's because it's usually paired to reward credit cards. If the annual fee of a card is much higher than what you may save on no foreign fees, then do check other options (see below). Or look for a low annual fee card.
Other options to consider for overseas transactions
Exchange Rates. When choosing a credit card for making foreign transactions, the provider’s exchange rate should be considered. Some providers are known for offering competitive exchange rates and other known for higher rates. Research your provider and find out which bucket they fall into.
Draw cash from ATM. Drawing from an ATM is another option. Drawing overseas will charge you an ATM withdrawal fee, so try to keep your number of withdrawals low. Remember sometimes carrying too much cash on you may not be the safest option.
Load up a travel card. If you are considering a travel card, remember to compare its exchange rate with that of your credit provider. Its good practice before making your final decision. Banks or other companies such as Travelex provide travel cards.
As always if you have any comments feel free to share them below.