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 an additional 3% of the purchase if that online merchant is based in another country. Or, if someone purchases airline tickets or a hotel room with a foreign based company, he could be charged an extra 3%. That additional fee can be quite a surprise when purchasing a high priced item.
Before ordering anything from a non-US based merchant, experts suggest calling the issuer to inquire about such fees. It could save some money to use a credit card without fees for foreign transactions. CapitalOne is an example of 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.
Financial experts say that because every credit card transaction while in another country—from lunch, T-shirts, books, and souvenirs—could mean paying an extra 3%, cardholders should consider the true price of the item before swiping their card.