What is a foreign transaction fee?

A foreign transaction fee is a charge imposed by a credit card issuer when a purchase is made with a card issued in one country but the transaction is being processed in another. For example, if you are travelling in a foreign country and use a card issued in the United States, the card issuer may add a foreign transaction fee to the amount of the purchase. In California, credit card issuers cannot charge a foreign transaction fee that is higher than three percent of the purchase. The law states that credit card issuers must make it clear to cardholders that they will be charged a foreign transaction fee before they make the purchase. This must be done by either providing the cardholder a written notice or by having a statement included in the cardholder agreement. It is important to note that foreign transaction fees are distinct from other fees such as annual fees, balance transfer fees, and late payment fees. Foreign transaction fees are charged in addition to any other fees that a card issuer might charge. Knowing this, it is important for consumers to be aware of the foreign transaction fees that their credit card issuer might charge in order to avoid costly surprises in their statement.

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What is a foreign transaction fee?

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