Beware of Foreign Transaction Fees on Your Credit Card
Credit card issuers are now turning to foreign transaction fees to further increase their revenue. Since February, four issuers--Discover, Citigroup, Simmons and Bank of America--have added or expanded this fee. Consumers need to be aware of this fee because it is much broader than it first appears and it could be charged even if one never leaves the United States.
Until recently, the foreign transaction fee was a 3% fee charged by some issuers on purchases made outside of the country. Now, issuers are expanding that fee to include all transactions made or processed outside of the United States. That means shopping online could cost you an additional 3% of your purchase if that online merchant is based in another country. Or, if you purchase airline tickets or a hotel room with a foreign based company, you could be charged an extra 3%. If you purchase a high priced item, that additional fee can be quite a surprise.
"Before you order anything from a merchant that is not based in the United States, it is a good idea to call your issuer and ask about this fee," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "You can save yourself a little money by using a credit card that doesn't charge a fee for foreign transactions. CapitalOne is one of the few cards that still does not charge a foreign transaction fee."
While credit cards are convenient to use when traveling outside they country, they are costly.
"Every transaction that you put on your credit card while in another country could be charged an extra 3%, including lunch, t-shirts, books, artwork and souvenirs. It is a good idea to keep this charge in mind to know the true price of the item you are buying," says Hardekopf.
Until recently, the foreign transaction fee was a 3% fee charged by some issuers on purchases made outside of the country. Now, issuers are expanding that fee to include all transactions made or processed outside of the United States. That means shopping online could cost you an additional 3% of your purchase if that online merchant is based in another country. Or, if you purchase airline tickets or a hotel room with a foreign based company, you could be charged an extra 3%. If you purchase a high priced item, that additional fee can be quite a surprise.
"Before you order anything from a merchant that is not based in the United States, it is a good idea to call your issuer and ask about this fee," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "You can save yourself a little money by using a credit card that doesn't charge a fee for foreign transactions. CapitalOne is one of the few cards that still does not charge a foreign transaction fee."
While credit cards are convenient to use when traveling outside they country, they are costly.
"Every transaction that you put on your credit card while in another country could be charged an extra 3%, including lunch, t-shirts, books, artwork and souvenirs. It is a good idea to keep this charge in mind to know the true price of the item you are buying," says Hardekopf.
