When credit cards emerged as a viable replacement for cash in the middle of the 20th century, travelers had already developed an elaborate ritual for overseas visits. If you planned ahead, you could order foreign notes from your bank. Otherwise, companies like American Express could issue travelers' checks in foreign currency. Last minute travelers often ended up at a currency exchange: a kiosk at an airport or in a tourist hotspot where clerks converted dollars to local cash for some of the least favorable exchange rates on the market.

For decades, globetrotters tolerated paying a percentage fee for the "convenience" of exchanging currency on the fly. Even after merchants around the world embraced credit cards, American tourists and professionals alike continued to let banks charge up to 5 percent on each transaction conducted outside the U.S. After all, if you had the cash to get yourself out of the country, you probably had some extra room in the budget for foreign transaction fees. Plus, they were almost always still cheaper than dealing with the high-cost street currency counter.

However, a few things happened to make banks reconsider their stance on foreign transaction fees:

  • From 1990 to 2012, the overall cost of international air travel actually declined by more than 10 percent, even as most consumer prices rose by 76 percent, according to statistics compiled by travel industry advocacy group Airlines for America.
  • Since 1999, 18 of the European Union's member states joined the "eurozone," consolidating local currencies at some of the world's most popular travel destinations.
  • As more customers pay with debit and credit cards, banks have spent less money shuttling currency across borders. Convenience fees once funded the budgets for expensive currency conversion services. Today, they're almost pure profit for banks.

Most of all, credit card issuers discovered that frequent overseas travelers typically spend far more with their accounts than cardholders who remain inside the United States. Eliminating foreign transaction fees means earning processing fees from merchants and annual fees from high-spending members. Whether you're a frequent flier on a first name basis with airport lounge attendants or just a casual traveler looking to save a few bucks, you can take advantage of this trend.

Avoid hidden surcharges on 'no-FTF' cards

Even if you pick one of these "no-FTF" credit cards for your next international adventure, you could still get socked by fees from local banks or retailers. Here's how to keep your trip surcharge-free:

  • Despite what your bank might tell you, merchants don't always welcome every American credit card equally. Stores might request or require you to use a card that transacts on their preferred network. If you prefer to carry an American Express or Discover card, pack a "spare" Visa or MasterCard to ensure acceptance.
  • Watch for "dynamic currency conversion" offers. Point-of-sale systems in tourist havens often use an unfavorable exchange rate while tacking on processing fees. Ask to do business in local currency and let your bank save you money.
  • Use ATM cash advances for emergencies only. Even "no-FTF" credit cards charge hefty cash advance processing fees. Plus, you'll usually have to pay a surcharge to a local ATM operator that can run as high as $20 in tourist districts. Instead, drop cash into an online checking account with a no-fee debit card.

Finally, protect yourself against pickpockets by writing down your credit card companies' emergency phone numbers and key account details before you leave. Keep a copy separate from your wallet or valuables. If your card gets lost or stolen, your bank's emergency assistance team can help replace your card or provide an emergency cash advance much more quickly than if they have to look up and verify your account information.

PenFed Premium Travel Rewards American Express® Card

Although Pentagon Federal Credit Union doesn't charge foreign transaction fees on any of its credit cards, this rewards card, which charges no annual fee, offers significant bonuses for airfare purchases made directly with airlines. PenFed designed their original cards to help soldiers and military families avoid banking fees during overseas deployments. With a one-time donation to an affiliated charity and a strong credit report, you can enjoy those same benefits. Cardholders can also request an embedded EMV chip, a feature that has become almost essential for travel in most parts of Europe.

Capital One® Venture® Rewards Credit Card

Capital One also waives foreign transaction fees across its entire credit card lineup. However, even casual travelers will love earning two miles per dollar spent on all purchases on the Venture Card. This card's Purchase Eraser tool lets you pick out eligible travel expenses from recent statements, then eliminates them by issuing a statement credit. Unlike most other travel rewards cards, earned points and rebates show up on your statement within a few days, enabling you to quickly convert large purchases into rewards flights or hotel nights. A typical household's monthly spending will usually earn more than enough rewards miles to offset this card's moderate annual fee ($0 for the first year and $59 after that).

BankAmericard Travel Rewards®

This travel rewards card charges no annual fee and offers a generous 1.5 points per dollar spent on everyday purchases, redeemable toward eligible travel purchases. Tether this rewards card to an eligible checking or savings account and you'll earn an annual 10 percent customer points bonus each year you keep the account. An embedded EMV chip and an ATM alliance with Barclays Bank in the UK make this a great card for travel throughout the EU.

Discover it® card

The original cash-back card has built a reputation for solid customer service, but it often gets overlooked as a serious travel card. Partnerships with JCB and UnionPay, along with Discover's ownership of the Diners Club brand, should make this your go-to credit card for trips to Asia, especially Japan, China, Taiwan, and South Korea. This card charges no annual fee and includes 24/7 travel assistance, making it even more valuable if you lose your luggage, your passport, or your wallet.

Barclaycard Arrival Plus™ World Elite MasterCard®

This relative newcomer to the travel rewards market packs a punch: earn two miles per dollar spent on purchases and get 10 percent miles back to use toward your next redemption every time you redeem for travel statement credits. Barclaycard waives this card's competitive annual fee of $89 for the first year, along with offering some significant signup bonuses for new customers. An embedded EMV chip and access to MasterCard's World Elite concierges and luxury travel specialists make this a great deal for casual travelers who want to see the world in style.