Best credit cards with no foreign transaction fee
May 7, 2012
By: Curtis Arnold
Back when international credit card transactions traveled along undersea phone lines, banks started charging fees for the convenience of switching francs, pounds or yen over to dollars. Today, with instant Internet authorizations and real-time currency conversion, it hardly seems fair to charge a foreign transaction fee (FTE). Fortunately, a growing number of banks agree.
Escape by Discover Card
Editor's note: This limited-time offer has expired. In late 2011, Discover made a play for the wallets of frequent travelers by eliminating foreign transaction fees and ramping up its travel rewards cards. Partnerships with Japan's JCB and China's UnionPay mean that many merchants throughout Asia now accept the Discover Card.
Like Capital One's Venture Card, Discover uses "miles" instead of points to track your rewards. New cardholders can 2 miles for every dollar spent for a reward value that exceeds Discover's typical CashBack Bonus.
Capital One Venture Rewards
It's a quirk of international banking law that puts cash in your pocket and makes those Visigoths look like darn good guys. As Capital One expanded its portfolio through global acquisitions and mergers, it picked up a U.K. business charter. Unlike here in the States, U.K. banks can't charge foreign transaction fees. Therefore, no Capital One credit cards charge FTFs.
Keen eyes will note that Capital One's daily currency exchange rates tend to drift a little higher than those of its competitors. However, with many travel rewards cards that offer bonus miles and no annual fee, Capital One still offers one of the cheapest ways to avoid paying extra for overseas transactions.
American Express supercharged the business traveler's favorite charge card with bonus rewards that really pay off at the airport. The $450 annual fee may seem steep, until you add up the value of the perks and rewards American Express stacked up for its cardmembers on this no-FTF account.
Platinum Card now serves as your access to a network of over 600 airport lounges, even those operated by airlines you don't normally fly. American Express concierges are standing by with access to hot entertainment and top restaurants in your destination city, or even if you're staying at home.
Citi Executive AAdvantage World Elite MasterCard
Citi's own elite no-FTF business credit card targets the same market as the American Express Platinum Card, building on its partnership with American Airlines for bonus perks and benefits. Like American Express, Citi bundles family airport lounge access into this $450 annual fee account. Without AAdvantage Gold status or higher, fliers have to pay $825 per year for the same membership.
American Airlines also waives luggage fees for the first checked bag on flights paid for with this EMV chip card. Signup offers for new account holders have included up to 25,000 American Airlines AAdvantage bonus miles, plus an annual award of 10,000 elite qualifying miles after $40,000 in eligible purchases.
Your support for military families can qualify you for Pentagon Federal's Promise Visa, a no-frills credit card with a low APR, no annual fee and no foreign transaction fees. In addition to saving you cash when you travel, this card currently features a balance transfer offer with no upfront fee and a low interest rate for as long as you need to pay down your debt. If you or a family member haven't served in the armed forces, you can still earn membership in PenFed by donating to one of the credit union's partner charity organizations.
Tips for using credit card abroad
While traveling overseas, keep these tips in mind to ensure that the best credit card deals don't end up costing you more than converting cash:
- Use the local currency. Ask merchants to charge your credit card in local currency. Many retailers in high tourist traffic areas may offer to convert your purchase to dollars, but at exchange rates that may be less favorable than your bank's.
- Get your PIN. If your credit card contains an embedded EMV smart chip, ask your bank for its personal identification number before you leave the United States. You'll need this PIN in some parts of Europe where merchants fear getting ripped off by cloned magnetic stripes.
- Conserve your cash. Remember that your bank may charge an extra processing fee and a higher APR for cash advances made at ATMs.
Finally, even if you have just started carrying one of these top rated credit cards, let your lender's fraud department know your itinerary a few days before your departure. This reduces the chances of your account being declined while you're away from home, and they can better prepare to issue you a replacement card or emergency funds if you lose your credit card.
About the Author
Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of 'How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line' (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).
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