Credit Card Glossary: Terms and Definitions

Foreign transaction fee

Foreign transaction fees are charged by many credit card companies on purchases made in a foreign currency, or on purchases that involve a foreign bank (regardless of whether a foreign currency is used). Usually, foreign transaction fees are a percentage of the amount of each foreign currency purchase, with no minimum or maximum. Sometimes this fee is called a foreign exchange fee. It once was called a currency conversion fee. Foreign transaction fees are charged by U.S. transaction processors such as Visa and MasterCard. The card issuing bank may choose to pass that fee along to consumers. Most do, and some tack on their own fees. In recent years, as travel credit cards have become more popular, more issuers have dropped foreign transaction fees, particularly from their travel cards. Compare no-foreign-transaction-fee credit cards.