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Does the Chase Sapphire Preferred® Card waive foreign transaction fees?

By , CardRatings contributor
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    Excellent question. The Chase Sapphire Preferred® Card, like many credit cards for excellent credit, has dropped foreign transaction fees altogether and features a plethora of perks that appeal to frequent travelers. Currently, Chase is offering a set of benefits to new Chase Sapphire Preferred® Card customers that mean you can earn:

    • 50,000 bonus points after you spend $4,000 on purchases in the first three months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®.
    • Two times the points on travel and dining at restaurants and one point per dollar spent on all other purchases worldwide. And there are no caps on the amount of rewards you can earn.

    But you asked about foreign transaction fees, so let’s take a look at what that “no-foreign-transaction fee” feature alone can do for you.

    Cards that charge foreign transaction fees tend to charge 3 percent per transaction made while you travel abroad. That means that everything from your croissant at that adorable Parisian café to your spa treatment at that Icelandic hotsprings is going to cost you 3 percent more than the price you see on the menu or tag. That 3 percent is, of course, on top of any money you lose due to the exchange rate in your country of travel.

    Travel experts generally agree that using a credit card while overseas is the cheapest way to fund your trip since you won’t have to deal with the fees charged by currency exchange counters, BUT, that’s only the case if you travel with a foreign-transaction-fee-free card.

    What's the big deal about no foreign transaction fees?

    Let’s take a look at an example:

    You finally made it to Iceland to take in all its glacial, volcanic beauty. Now that you’re here, you know you want to spend a few days on the famous “Ring Road” that circles the island, so you head to the car rental location in Reykjavik, plop down your credit card (purchasing the recommended undercarriage insurance for those rough Iceland roads, of course), and hit the road feeling pretty good about the good deal you got.

    Several weeks after your trip, you sit down to look through your credit card bill and notice that all of your charges – even that good deal on the car rental – are higher than you anticipated, even after you factor in the exchange rate.

    You were expecting a $350 car rental charge, but it’s actually $360.50. The coffee you drank every morning that was $4.50 is $4.64. The petrol for that Ring Road journey is coming in at $77.25 instead of $75. Each of those dinners at $50 a pop, are now $51.50.

    Now, those extra charges may not look like much, but when you figure it into every single charge during the course of your trip abroad, it will add it. If you use your credit card for a total of $1,000 in purchases while abroad, you’ll actually end up paying $1,030. Again, it doesn’t seem like much, but who wants to pay even $30 in fees?

    Especially when you don’t have to.

    With a card like the Chase Sapphire Preferred® Card, or any of a myriad of other “no foreign transaction fee” cards, you don’t have to. Seriously, save that $30 for a fun souvenir or put it toward your next trip.

    Other considerations for no foreign transaction fee credit cards

    Now, some of these “no-foreign-transaction fee” cards do come with an annual fee – in the case of the Chase SP, it’s $95 (waived for the first year) – but if you’re paying an annual fee, rest assured you’re also getting more than just the chance to use your card overseas fee-free. Remember that you can rack up points with the Chase Sapphire Preferred® Card to the tune of two points per $1 spent on travel and dining and one point per $1 on all your other purchases. Plus, your points are worth 20 percent more when you redeem them for travel through the Chase Ultimate Rewards® portal (hence that 50,000 point bonus that’s worth up to $625 in travel).

    So justifying that $95 annual fee isn't hard, especially if you’re a regular overseas traveler. Just spend about $3,200 outside the United States every year and the amount you save in the typical 3 percent foreign transaction fees will offset your annual fee. And that’s without even taking into consideration the rewards you’ll earn that can also go toward offsetting that fee.

    Remember to pay off your balance each month so you avoid the interest charges that would sap your rewards earnings.

    Chase actually offers more than a dozen cards, both consumer and business, that don’t come with foreign transaction fees, including several airline- and hotel-branded cards like the British Airways Visa Signature® Card and the IHG® Rewards Club Select Credit Card.

    If you're unable to qualify for a Chase Sapphire Preferred Card or another Chase card and you still want to save on foreign transaction fees, consider any Capital One no foreign transaction fee credit card offers. Their unusual structure as a bank in both the U.S. and the UK means they're not allowed to charge any foreign transaction fees, even on their credit cards for limited/no history credit. On the other hand, if you’re in the market for some sweet perks along with no foreign transaction fees, you can think about carrying a higher-tier credit card like the Chase Sapphire Reserve℠ or the MasterCard® Black Card™.

    Both of these cards come with substantial annual fees – $495 in both cases, plus additional fees for authorized users – but they also come with luxury perks and features that go way beyond no foreign transaction fees. These cards are truly designed for the frequent traveler who relishes the finer things in life.

    No matter your end of the credit card spectrum – purely functional or expecting loads of accompanying perks – there’s like a no-foreign-transaction fee card out there that fits into your wallet. Just remember to fully understand your financial situation and history before you apply and make sure that your paying off your balance each month so that interest charges don’t eat into that vacation fund you’re building up.

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