What is a foreign transaction fee?

A foreign transaction fee is a surcharge that credit card companies may impose when a credit card user purchases an item from a foreign country. This fee is charged to cover the foreign currency conversion rate. In other words, the credit card company must convert the currency of the transaction into the currency of the cardholder’s country. This foreign transaction fee can typically range from one to three percent of the total transaction cost, although rates vary based on the specific credit card issuer. In New York, most credit card companies that offer cards to residents must adhere to the Credit Card Accountability Responsibility and Disclosure Act of 2009. According to this law, credit card companies are prohibited from charging consumers for certain transactions, including currency conversion fees. Therefore, if a foreign transaction fee is being charged to a New York consumer, it is likely not in compliance with the Credit CARD Act and may need to be challenged. It is important for consumers to be aware of the foreign transaction fee when making international purchases. For example, if a consumer is making a purchase from a foreign country and the cost is listed in the foreign currency, then the credit card company may charge a foreign transaction fee when converting the currency. This fee can significantly add to the cost of an item, so it is important to be aware of this fee before making an international purchase.

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What is a foreign transaction fee?

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