When using a credit card abroad, the term “Foreign Transaction Fees” often comes up. These fees are charged by credit card issuers for transactions made in a foreign currency or through a foreign bank. Let’s break down the key terms and how to avoid them:
What are Foreign Transaction Fees?
Foreign Transaction Fees are charges applied when you make a purchase in a currency other than your card’s currency or when the transaction is processed through a foreign bank. These fees usually range from 1% to 3% of the purchase amount.
What is an Annual Fee?
An Annual Fee is a yearly charge by the credit card issuer for the privilege of using their card. This fee is typical for credit cards that offer extensive rewards or benefits, and can range from $0 to several hundred dollars.
How to Avoid These Fees When Traveling?
- Choose a Credit Card with No Foreign Transaction Fees: Many travel credit cards waive Foreign Transaction Fees, saving you money on each purchase made abroad.
- Opt for Cards with No Annual Fee: Some credit cards come with no Annual Fee, so you don’t have to pay just for having the card.
Credit Cards with No Foreign Transaction Fees AND No Annual Fee:
Several banks offer credit cards that don’t charge either Foreign Transaction Fees or annual fees. Here are the top 3 options:
-
Capital One VentureOne Rewards Credit Card
-
Bank of America Travel Rewards Credit Card
-
Wells Fargo Autograph Card
When selecting a travel credit card with no Annual Fee and no Foreign Transaction Fees, the key considerations are:
1. Rewards Program:
- Points or Miles: Look for cards that offer points or miles for travel-related purchases.
- Cash Back: Some cards offer cash back on travel expenses.
- Bonus Categories: Consider cards that provide extra rewards for categories like dining, travel, or transportation.
For example:
Wells Fargo Autograph Card:
- Earns 3 points per dollar on specific categories like restaurants, travel, gas stations, transit, popular streaming services, and phone plans.
- Earns 1 point per dollar on all other purchases.
2. Sign-Up Bonus:
Introductory Offers: Evaluate any sign-up bonuses or introductory offers that provide a significant number of points, miles, or cash back after meeting a spending threshold.
For example:
Bank of America Travel Rewards Credit Card:
Offers 25,000 online bonus points after spending $1,000 in the first 90 days, which can be redeemed for a $250 Statement Credit toward travel purchases.
3. Redemption Flexibility:
- Ease of Use: Check how easy it is to redeem rewards for travel. Some cards might have limitations or blackout dates.
- Transfer Partners: Cards that allow transferring points to airline or hotel loyalty programs can offer more value.
For example:
The Capital One VentureOne Rewards Credit Card allows you to redeem your miles in several flexible ways:
- Travel Purchases: You can use your miles to cover travel expenses like flights, hotels, car rentals, and more. Each mile is generally worth 1 cent when redeemed this way.
- Transfer to Travel Partners: Capital One has a range of airline and hotel partners where you can transfer your miles. These partners include programs like Emirates Skywards, Air Canada Aeroplan, and Wyndham Rewards, among others. The transfer rates vary depending on the partner.
- Statement Credits: You can apply your miles as statement credits toward travel purchases made on your card.
- Book Through Capital One Travel: You can use miles to book travel directly through the Capital One Travel portal.
4. Global Acceptance:
Ensure the card is widely accepted internationally. Visa and Mastercard are generally more widely accepted than American Express or Discover.
For example: Above top 3 most popular cards are Visa and Master due to the Lower Transaction Fees for Merchants, Extensive global networks, Universal Acceptance and Strong brand trust.
5. Fraud Protection:
Evaluate the card’s fraud protection policies and their responsiveness to issues.
For example:
Capital One VentureOne Rewards Credit Card offers
- Zero Liability Protection: You won’t be held responsible for unauthorized charges if your card is lost or stolen.
- Security Alerts: Notifications via email or text if any suspicious activity is detected on your account.
6. Credit Score Requirements:
Eligibility: Understand the credit score needed to qualify for the card. Cards with higher rewards and perks often require better credit scores.
Credit card requirements, especially for travel cards with no Annual Fee and no Foreign Transaction Fees, often depend on your credit score. Here’s a general breakdown of what different credit score ranges typically signify for card eligibility:
Credit Score Ranges:
- Excellent (750-850):
– Typically qualifies for the best cards with premium rewards, lower interest rates, and favorable terms.
– Cards with no Annual Fee and no Foreign Transaction Fees are often available in this range. - Good (700-749):
– Qualifies for a wide range of credit cards, including many with good rewards programs.
– Likely eligible for no Annual Fee and no foreign transaction fee cards, though terms may be slightly less favorable than for those with excellent credit.
7. Introductory APR Offers:
0% APR: Some cards offer 0% APR on purchases or balance transfers for an introductory period, which can be beneficial for large upcoming expenses.
For example: See the summary table below
When comparing these top three travel rewards credit cards
- Bank of America Travel Rewards Credit Card
- Capital One VentureOne Rewards Credit Card
- Wells Fargo Autograph Card
The key similarities and differences were summarized below:
| Card / Feature | Bank of America® Travel Rewards Credit Card |
Capital One VentureOne Rewards Credit Card |
Wells Fargo Autograph℠ Card |
|---|---|---|---|
| Annual Fee | None | None | None |
| Foreign Transaction Fee | None | None | None |
| Rewards Structure | – Earns 1.5 points per dollar on all purchases. – Points can be redeemed for travel-related expenses such as flights, hotels, vacation packages, and more. |
– Earns 1.25 miles per dollar on all purchases. – Miles can be redeemed for travel purchases like flights, hotels, rental cars, or transferred to travel partners. |
– Earns 3 points per dollar on specific categories like restaurants, travel, gas stations, transit, popular streaming services, and phone plans. – Earns 1 point per dollar on all other purchases. – Points can be redeemed for travel, cash back, gift cards, and more. |
| Sign Up Bonus | 25,000 online bonus points after spending $1,000 in the first 90 days, which can be redeemed for a $250 Statement Credit toward travel purchases. | 20,000 Bonus Miles after spending $500 within the first 3 months, equivalent to $200 in travel. | 20,000 bonus points after spending $1,000 in the first 3 months, worth $200 in redemption value. |
| Introductory APR | 0% APR for 18 billing cycles on purchases. | 0% APR on purchases and balance transfers for 15 months. | 0% APR for 12 months on purchases. |
| Additional Benefits | Potential for higher rewards rates if you are a Preferred Rewards member. | Get automatic insurance for covered loss at no extra charge when use this credit card to purchase your fare. | Cell phone protection and access to Wells Fargo’s Visa Signature Concierge service. |
| Redeeming Rewards | Focuses on travel credits, with rewards used primarily for travel-related purchases. | Offers flexible redemption options for travel purchases or transfer to various travel partners. | Provides a wide range of redemption options, including travel, cash back, and gift cards. |
Conclusion
These cards cater to different spending habits and travel preferences, so the best choice depends on your specific needs and how you plan to use the rewards.
By selecting a credit card that offers both no Foreign Transaction Fees and no Annual Fee, you can save significantly on your travel expenses. Credit cards with these options, allowing you to enjoy your travels without worrying about extra costs.
| Credit Card | Bonus and Rewards | Annual Fee | |
|---|---|---|---|
|
Capital One VentureOne Rewards Credit Card |
|
$0 |
|
Bank of America®Travel Rewards credit card |
|
$0 |
|
Wells Fargo Autograph℠Card |
|
$0 rates & fees |