Foreign transaction fee.
In plain English
A foreign transaction fee is an extra percentage some credit and debit cards tack on when a purchase runs through a foreign bank or settles in a currency other than U.S. dollars. It applies whether you are traveling abroad or buying online from an overseas seller from your couch. The fee is calculated on the converted dollar amount of the purchase, so a larger purchase means a larger fee. Many travel-focused cards waive this fee entirely, which is why frequent travelers shop for cards that charge nothing on foreign spending.
01Why it matters
A few percent on every overseas purchase adds up fast on a trip, and it can hit you on online orders too, so checking your card's foreign transaction fee before you travel can save you real money.
02The math, step by step
Say your card charges a 3 percent foreign transaction fee and you spend 1,000 dollars abroad over a trip. That is an extra 30 dollars added to your bill purely for the fee, separate from the currency conversion. A card that waives the fee would charge you nothing extra. The fee is a percentage set by your card issuer, so check your card terms.
03What this is NOT
A foreign transaction fee is not the same as the exchange rate. The conversion turns the foreign price into dollars at a network rate; the foreign transaction fee is a separate percentage your card issuer adds on top of that converted amount.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice