A foreign transaction fee is a percentage charge added by the card issuer on purchases that are not in the card's billing currency.
A foreign transaction fee is a percentage charge added by the card issuer on purchases that are not in the card’s billing currency.
Also called: Foreign currency fee, FX fee.
How it works#
The fee is published in the issuer’s terms, which makes it readable and comparable in advance. Whether it applies depends on the currency of the transaction or where the merchant is based, not on the currency a terminal displays. That is the source of the most common mistake: paying in your home currency abroad usually does not avoid the fee, it simply adds a second markup on top of it.
Not to be confused with#
A foreign transaction fee is not the same as dynamic currency conversion: the fee is charged openly by your own bank, while terminal conversion hides the merchant side’s markup inside the exchange rate.
In German#
The German term is Fremdwährungsgebühr. German version of this term
Related terms#
- Dynamic currency conversion: Dynamic currency conversion is the offer to settle a payment abroad in your own home currency, with the merchant side choosing the exchange rate.
- Interbank rate: The interbank rate is the exchange rate banks trade at with each other, and it serves as the benchmark against which any markup abroad is measured.
- Cash advance: A cash advance is withdrawing cash on a credit card, which counts as borrowing and therefore carries its own fees and interest rules.
Articles that use this term#
TopicEvery article and term onCards and money.