Nerdwallet credit cards with no foreign transaction fees

When you buy something on an international trip, it might cost you more than just the price tag plus tax. Some credit cards charge a foreign transaction fee on non-U.S. purchases — usually about 3% of the total cost of the purchase, which can add up over the course of a trip abroad.

In fact, it can accrue without you even having to leave your house. Here's why.

You don’t necessarily need to be abroad to be shopping abroad

Thanks to online shopping, it’s easy to make purchases with foreign merchants while safely at home in the U.S. And your credit card company doesn’t care where you’re physically located when you use your card — what matters is where the retailer is stationed.

Sometimes it’s clear whether online merchants are based overseas, but sometimes it’s not. If the website doesn't make it obvious, you could get slapped with an unexpected fee on your credit card bill. A 3% fee on an article of clothing may not be too painful, but a 3% fee on a multi-thousand-dollar vacation package? That could sting.

🤓Nerdy Tip

Credit card payment networks may also charge a currency conversion fee, for converting a foreign currency into U.S. dollars. This is not the same thing as a foreign transaction fee.

What to do if you're charged a foreign transaction fee unwittingly

Foreign transaction fees will show up on your bill at the end of the month, so make sure you scrutinize your credit card statement carefully each month to be sure you’re not getting hit with such fees unsuspectingly.

If you see a fee you weren't expecting, call your issuer to investigate. You may have bought something online from a foreign retailer and didn’t even realize it.

You could consider asking your issuer to reverse the fee, especially if there was no indication that the merchant was based outside the U.S.

How to avoid foreign transaction fees once and for all

Fortunately, there's a sure-fire way to dodge this annoyance: Opt for a credit card that carries no foreign transaction fees. (You can tell by consulting a card's terms and conditions, which must list any such fees.)

Most good travel credit cards don't charge foreign transaction fees. And while they're more common on cash-back credit cards, it's possible to find ones that skip it. Capital One and Discover, for instance, do not charge foreign transaction fees on any of their cards.

Discover cards aren't always the best choice for international travelers because of spotty acceptance overseas. But if you’re planning to do your shopping at home, the Discover it® Cash Back is a good choice. You’ll earn 5% cash back in rotating quarterly bonus categories (up to $1,500 in combined spending per quarter) and 1% cash back on all other purchases. Activation is required quarterly to earn the higher rate.

Plus, the Discover it® Cash Back carries an annual fee of $0.

What's next?

Have you ever looked at your credit card bills after returning home from a trip and been shocked at how much each purchase actually cost you? Or ordered something online from an American retailer that turned out to be more expensive than you expected? It’s not that the exchange rate is worse than you thought — your credit card issuer likely added a foreign transaction fee to every purchase.

What is a foreign transaction fee?

The majority of credit cards charge a foreign transaction fee of 2.5% whenever you charge a purchase that’s not in Canadian dollars. You may not have noticed it before since the exchange rate that shows up on your statement already includes the fee, but it means that every purchase costs a little bit extra.

It doesn’t matter if you’re making an online purchase in U.S. dollars from your Canadian living room or paying for dinner out in Istanbul in Turkish lira. If you’re not paying in CAD, you’ll have to pay the exchange fee. Fortunately, there are a few credit cards that don’t charge foreign transaction fees.

» MORE: Are you familiar with these common credit card fees?

Canadian credit cards without foreign transaction fees

Credit cards without foreign transaction fees have become more common in recent years. As long as you use these types of cards, you’ll only pay the regular exchange rate when making purchases in currencies other than Canadian dollars.

Here are some of the options:

Scotiabank Passport Visa Infinite Card

Besides freedom from foreign transaction fees, the Scotiabank Passport Visa Infinite Card also offers free annual lounge passes, excellent travel insurance, and a flexible rewards program. However, the $139 annual fee and minimum annual income of $60,000 mean that it may not be a good fit for everyone.

Home Trust Preferred Visa

The Home Trust Preferred Visa is a popular non-foreign-transaction-fee credit card since it has no annual fee. Instead of earning travel rewards, you’ll get 1% cash back on all your purchases.

STACK

STACK is a prepaid Mastercard, so you can only spend up to the amount you load onto it. One significant advantage of STACK is that you can withdraw money from ATMs without paying foreign transaction or cash advance fees.

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How to calculate foreign transaction fees

While most credit cards charge a foreign transaction fee of 2.5%, some may go as high as 3.5%. You’ll have to check your credit card terms and conditions for the specific fee you’ll be charged. To calculate how much you’re paying, you could use online currency calculator tools available from Visa and Mastercard.

It’s worth noting that some merchants will allow you to choose to pay in either the local currency or your home currency, which is known as dynamic currency conversion. It’s always better to select the local currency, as you’ll pay the exchange rate set by the credit card network rather than a higher rate that often includes extra fees. Plus, even if you choose to pay in Canadian dollars, you’ll still have to pay the foreign transaction fee since the purchase is occurring outside of Canada.

Should I use a U.S. dollar credit card instead?

American dollar credit cards can be handy if the majority of your purchases are in U.S. dollars. However, if you’re paying in any other currency, the same foreign transaction fee would apply. A U.S. dollar credit card could be an excellent addition to your wallet if you also have a Canadian card, but it’s likely not a good choice if you only want to have one card.

You also need to consider how you’ll pay your monthly credit card bills. A U.S. dollar credit card requires you to pay your bill in USD. If you don’t have a steady stream of U.S. income, you’ll need to convert your Canadian dollars to USD before you can pay your bills — which also comes with a fee.

Although paying a 2.5% or 3% conversion fee may not seem like a lot, it can add up over time. If you plan to make more than sporadic purchases in foreign currencies, such as if you’re planning an upcoming trip or shopping online, consider getting a no-foreign-transaction-fee credit card to help you keep costs down.

» MORE: The best ways to use your credit card overseas

Which card has no foreign transaction fee?

Does Capital One have no foreign transaction fees?

Does the Discover it card have foreign transaction fees?

What is the best way to avoid foreign transaction fees?