Even if you're not a world traveler, you might get stuck paying foreign transaction fees on credit card purchases. Matt Schulz from CreditCards.com joins Money Girl to explain foreign fees, which types of cards you should carry when traveling, and the best no-foreign fee cards available to save money.
If you plan to travel outside of the U.S., or even purchase items online from a foreign company, expensive credit card fees can spoil your fun by adding up to 3% to your bill.
But the good news is that it’s easy to avoid these charges by choosing a credit card that waives all foreign transaction fees.
In this week’s podcast, Money Girl is joined by Matt Schulz, senior industry analyst at CreditCards.com. He explains foreign transactions fees, gives traveling tips, and recommends the best credit cards to take on your next overseas trip.
Free Resource: Travel Card Comparison Chart (PDF download)—Laura compares the best no-foreign transaction fee credit cards!
How to Avoid Credit Card Foreign Transaction Fees
Here are 5 tips to avoid expensive foreign transaction fees no matter if you’re on vacation or shopping online:
Tip #1: Understand when foreign fees apply
Banks and card issuers charge foreign transaction fees when you use a U.S. credit card outside of the U.S. or make a purchase through a foreign bank. For example, if you purchase clothing from a European company’s website (even if you pay in U.S. dollars), you typically also have to pay an additional transaction fee.
However, it’s more common to get blindsided by foreign transaction fees after you return from an overseas vacation and see them on your next credit card statement.
Tip #2: Maintain good credit
In general, credit cards that offer the best benefits—such as travel rewards, cash back, no fees, and low interest rates—also require you to have good or excellent credit.
So, in order to qualify for some of the best no-foreign transaction fee cards, you’ll need to keep your credit in good shape. For strategies to build credit fast download my free Credit Score Survival Kit tutorial.
See also: Best Tips to Improve Your Credit Score
Tip #3: Shop and compare card benefits carefully
Shopping for a credit card can be confusing because there are so many details in the rewards. Compare benefits carefully and choose cards that align with your spending habits and amounts.
For instance, if you don’t travel often, using a no-foreign fee card that offers cash back card might be more valuable than one that accrues points for travel miles.