Whether you spend months saving for that big trip overseas or you have the funds to globe trot regularly, you probably don’t like the idea of paying up to a 5 percent fee each time you use your credit card outside the United States. The fact is, nearly 74 million Americans traveled abroad in 2015 and you can bet that most of those people would rather NOT pay foreign transaction fees on all their purchases as they explore and enjoy their trip.
The foreign transaction fee charged by credit card issuers used to be par for the course. Tourists and business travelers alike accepted the fee as the cost of conveniently making purchases while abroad and appreciated that even with the fee using the card likely still cost less than going through a traditional currency conversion counter.
But that thinking began to change several years ago when 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. Once one credit card issuer got rid of the fee, others soon followed suit and added foreign-transaction-fee-free cards to their portfolios.
And if you're thinking, "Yeah, but I bet I'll have to pay a hefty annual fee for those cards," think again. There are a litany of cards out there that charge little or no annual fee plus offer the cost-savings of no foreign transaction fees.
And, by the way, it used to be that American credit cards lacked some of the safety features required to use a card overseas (this is pre-chip-and-PIN technology becoming ubiquitous in the U.S.); these days, American credit cards generally have the technology needed to travel abroad. The only real thing you'll likely need to consider is whether your issuer is widely accepted. In general, Visa and MasterCard have the highest acceptance rates around the world.
Our editor's take:
This is a great travel card for someone who doesn't want to commit to a particular airline or hotel chain. Earn two miles per $1 on every purchase, every day. There's no cap on earning potential, no expiration date on those miles as long as the account remains open, no travel blackout dates and no foreign transaction fees.
Capital One does not charge foreign transaction fees across its entire credit card lineup. However, even casual travelers will love earning two-times the miles per dollar spent on every purchase made on the Capital One® Venture® Rewards Credit 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 miles show up on your statement within a few days, enabling you to quickly convert large purchases into rewards toward flights or hotel nights. A typical household's monthly spending might earn more than enough rewards miles to offset this card's annual fee ($0 introductory fee for the first year and $95 after that).
Not interested in paying an annual fee? With Capital One® VentureOne® Rewards Credit Card, you can earn 1.25 miles per dollar on every purchase, every day, all while paying no foreign transaction fees and a $0 annual fee.
Our editor's take:
We like that this card gives new cardholders an opportunity to earn a hefty amount of bonus points, that you can earn 2 points per dollar spent on travel and dining at restaurants, and the ability to transfer points to participating frequent travel programs at full value.
New customers have the potential to earn a lot of bonus points with Chase Sapphire Preferred. 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®), plus earn 5,000 bonus points after you add the first authorized user and make a purchase in the first three months from account opening.
Earn 2X points on travel and dining at restaurants, and 1 point per dollar spent on all other purchases worldwide. This card offers multiple redemption options, including cash back, gift cards and travel. You'll always get 20 percent off travel when you redeem your points for airfare, hotel stays, car rentals and cruises when booking through Chase Ultimate Rewards®.
Sweetening this card's potential is the ability to transfer your Chase Ultimate Rewards®, at full value, to participating frequent traveler programs (in other words, 1,000 Chase Ultimate Rewards® points equals 1,000 partner points or miles). This card is chip-enabled for enhanced security and wider acceptance, charges no foreign transaction fees, and features 24/7 direct access to dedicated customer service specialists, which can come in quite handy no matter what time zone you're in.
Our editor's take:
Earn rate of 1.5x miles per dollar on purchases is competitive, but Discover also matches all the miles you earned at the end of your first year with this card. Other interesting perks: Get up to $30 back for in-flight Wi-Fi each year and no annual fee. Redeem your miles in any amount for a credit to your statement to cover travel purchases.
Discover's newest product differentiates itself from other Discover it® cards by not offering bonus rewards on rotating categories, instead offering a higher base rate of earning plus some interesting perks for the frequent traveler.
Cardholders earn 1.5x miles for every dollar you spend on purchases, with 100 miles equating to one dollar. At the end of your first year of membership, Discover will match all miles earned. You can redeem miles in any amount toward travel purchases on your statement. Another core benefit is reimbursement for in-flight Wi-Fi purchases via statement credit (up to $30 per year). All this comes with no annual fee and no foreign transaction fees.
If you’d rather earn your rewards in the form of cash back, take a look at Discover it® - Cashback Match™. Right now Discover is offering to match all the cash back you've earned at the end of your first year automatically (only for new card members). With this card you can earn 5 percent cash back in categories that change each quarter like gas and restaurants (up to the quarterly maximum each time you activate) and 1 percent cash back on all other purchases.
Our editor's take:
We're longtime fans of this card, which offers five points per dollar spent on airfare, an appealing bonus offer and no annual fee, plus the consumer-friendly benefits of a credit union. In particular, that means you'll have the personal experience of a small bank versus a larger, national chain.
Although Pentagon Federal Credit Union (PenFed) doesn't charge foreign transaction fees on any of its credit cards, this particular rewards card, which also charges no annual fee, offers significant rewards for airfare purchases (5 points per dollar spent). PenFed designed its original cards to help soldiers and military families avoid banking fees during overseas deployments, and this card ups the ante with rewards opportunities.
With PenFed Credit Union membership and a strong credit history, you can submit a credit card application for consideration. If approved, you can enjoy these benefits in addition to a number of other perks and features. By the way, cardholders can also request an embedded EMV chip, a feature that has become nearly essential for travel in most parts of Europe.
Our editor's take:
A competitive 1.5 points per dollar earn rate is a good start, but what really catches our attention is this card's additional 10 percent customer points bonus on every purchase when you have an active Bank of America checking or savings account.
This travel rewards card charges no annual fee and offers a generous 1.5 points per dollar spent on all purchases, redeemable toward a statement credit to pay for eligible travel purchases such as for flights, cruises, hotels, vacation packages, baggage fees or rental cars. Tether this rewards card to an active eligible Bank of America checking or savings account and you can earn an additional 10 percent customer points bonus on every purchase when you have an active Bank of America checking or savings account. If you're a Preferred Rewards client, you can increase that bonus to 25 percent or more. An embedded EMV chip and an ATM alliance with Barclays Bank in the United Kingdom make this a great card for travel throughout the UK.
If you’re looking for a card that gives a higher rewards rate on certain categories, take a look at U.S. Bank FlexPerks® Travel Rewards American Express® Card - 20,000 Bonus FlexPoints, with which you can earn 2X FlexPoints at restaurants and fast food; 2X FlexPoints on airline, gas or grocery spending (whichever you spend most on each monthly billing cycle); and 2X FlexPoints on most cell phone expenses. You can earn 1 FlexPoint per dollar spent on all other eligible net purchases.
Our editor's take:
With a strong three miles (Avios) per $1 spent on British Airways purchases and one mile per $1 on other purchases, this card is a solid choice in terms of rewards and also perks.
This card is an excellent choice for individuals who spend a fair amount on their credit card annually and enjoy flying on British Airways. Here's the deal, if you spend $30,000 or more annually on your card, you'll receive a Travel Together Ticket that is good for the next two years. With this ticket, you can purchase one airfare using miles -- even up to first class -- and a companion gets a ticket in the same class for free. That's HUGE! Add to it the regular earn rate of three miles per dollar spent with British Airways and one mile per dollar on all your other purchases (as well as no foreign transaction fees, of course) and this is great option for British Airways-loyal travelers. Plus, new cardholders can earn up to 75,000 bonus Avios in their first year of card membership. Earn the first 50,000 miles after you spend $3,000 within the first three months and earn the next 25,000 after you spend a total of $10,000 in the first year. Add that up for a total of 75,000 possible bonus miles in your first year.
Our editor's take:
If you're looking for a card that's a bit outside the "big bank" box, but still offers plenty of perks and features, this card from the regional Fifth Third Bank could be right for you.
Sure you want a card with no foreign transaction fees when you travel abroad, but it certainly doesn't hurt if that card comes with a number of other perks and features, including the opportunity to rack up some cash back. Whether you're traveling abroad or sticking close to home, you'll earn 3 percent back on your restaurant purchases and 2 percent back on gas, grocery and drugstore purchases on up to $1,500 spent in the combined categories each quarter. You'll snag 1 percent back on all your other purchases with no cap.
The TRIOSM Credit Card competes well with cards from much larger banks and even offers a perk most of them don't: cellular telephone protection. Just pay your cellular bill each month with your card and you'll be eligible for protection should your phone be damaged or stolen.
Cashback Rewards Plus American Express® Card
Our editor's take:
USAA has a number of cards designed to meet the unique needs of servicemen and women and their families. We like that this card allows cardholders to earn cash back on everyday purchases as well as bonus cash back on purchases at gas stations, on military bases and at grocery stores.
United States law outlines a number of loan and credit card rate limits issuers must provide for members of the military. Of course, USAA meets all these guidelines, but it actually goes a step further in several cases.
USAA caps the interest rate at 4 percent (the law requires at least 6 percent) for existing balances for up to 12 months during deployment or following a Permanent Change of Station (PCS). It also rebates all finance charges accrued while the cardholder serves on an active military campaign.
And while those APR benefits are nice, the card sweetens the pot more by offering the opportunity to earn 3 percent back at gas stations and on military base purchases (on up to $3,000 in annual purchases) and 2 percent back at grocery stores (again, on up to $3,000 in annual purchases). All other purchases, as well as those and gas stations, military bases and grocery stores after reaching the annual cap, earn 1 percent cash back.
Plus, of course, USAA doesn't charge foreign transaction fees, a benefit service members and their families stationed abroad are sure to appreciate.
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.