Foreign transaction fees are extra charges applied when you use your credit card abroad or when the purchase is processed through a foreign bank. The typical rate is around 3%, which adds up quickly for frequent travelers. For example, a $1,000 trip expense could cost an additional $30 simply due to these fees. Historically, these charges covered the cost of currency conversion and cross-border processing. However, competition among issuers has led many travel-oriented cards to eliminate them as a selling point.

For international travelers, choosing a no-foreign-transaction-fee card can save significant money. It also provides peace of mind, knowing that purchases abroad won’t carry hidden costs. Even for online shopping, foreign transaction fees can apply if the merchant processes payments outside the U.S. Understanding this fee is critical for those who shop internationally, whether in person or online. Many popular travel rewards cards highlight this perk because it strongly appeals to global consumers.