What is a foreign transaction fee?

A foreign transaction fee is a fee charged by a credit card company when a transaction takes place outside of the United States. This fee is typically expressed as a percentage of the total transaction amount, often around 3%. The fee exists as a way for credit card companies to protect themselves against currency exchange rate fluctuations. When a transaction is conducted in US dollars, the credit card company does not incur any exchange rate risk. For any transaction carried out in a foreign currency, the credit card company’s profit is subject to changes in the exchange rate. The foreign transaction fee is governed by the Credit Card Act of 2009 in Florida. It requires that issuers of credit cards must clearly disclose to the consumer any foreign transaction fees associated with their credit card. In addition, it requires that the issuer inform the consumer of the conversion rate that will be applied to the transaction. It is important to note that, in Florida, the fee is only charged on transactions that go through a foreign bank, not those that are just processed by a US bank in a foreign currency. This means that if you use a US-based card for a transaction in another country, you are unlikely to incur a foreign transaction fee.

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What is a foreign transaction fee?

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