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Update: Some offers mentioned below are no longer available. View the current offers here – Citi ThankYou Premier
Whether you’re traveling abroad or making a purchase through an international retailer, it’s essential to use a credit card that doesn’t incur foreign transaction fees. Luckily, there are plenty of good options available. TPG Senior Points & Miles Contributor Jason Steele shares a list of top picks and explains why these fees need to be gone for good.
Update: As readers have pointed out, we accidentally left one excellent option off the list: Citi Prestige. This card waives foreign transaction fees, but it also offers other tremendous travel perks, including a $250 annual airline credit, Priority Pass and Admirals Club access (when you’re flying AA), 3x points on airfare and hotels, and the fourth night free when you book a hotel through Citi. You can currently earn a bonus of 50,000 points after you spend $3,000 within the first three months. The card carries a $450 annual fee.
I’ve been writing about credit cards and travel rewards just about every (working) day of my life since 2008, and it’s been somewhat of a personal crusade of mine to highlight the injustice of foreign transaction fees. I don’t mind paying a reasonable amount when I get something of value in return, but I also know that a foreign transaction fee is just pure profit with no value offered to the cardholder.
So in today’s post, I want to briefly explain why foreign transaction fees are evil, and offer the top-10 cards that have no fees for transactions processed outside of the United States.
The Case Against Foreign Transaction Fees
A foreign transaction fee (FTF) is a fee imposed on a cardholder whenever a transaction is processed outside of the United States. A FTF can be imposed when the cardholder is at home and makes purchase from a foreign company, or even when a merchant is just using a foreign credit card processor.
Since a FTF is not a currency-conversion fee, it can also be charged even when a transaction occurs in US dollars, which can happen in several foreign countries that use the dollar, or when your card is charged using so-called Dynamic Currency Conversion.
But is there a cost associated with processing a transaction outside of the United States? Of course not, as banks transfer billions of dollars a day to and from foreign countries and foreign currencies using the most favorable rates called Interbank Exchange rates. In fact, a judge once found that Visa and MasterCard “merely act as a clearinghouse, performing arithmetical calculations at insignificant cost.” So basically, you can be dinged 3% by these fees just so a big bank’s computer systems can perform a simple mathematical problem that any sixth grader can do on a calculator.
Finally, it’s interesting to note that many of the same credit card issuers that impose foreign transaction fees on their American cardholders also impose the same fees on their foreign cardholders, such as Canadians, who make purchases in the US. This shows that these fees are simply opportunistic and not based on any additional costs of doing business outside of the United States.
Top Credit Cards with No Foreign Transaction Fees
Thankfully, Americans are starting to get the message that the FTF is not necessary or acceptable, and the credit card industry appears to be taking notice. Every year, more and more cards eliminate the FTF, especially those that are marketed to international travelers. Here are 11 of the best — keep reading for details on their benefits and current offers:
1. Chase Sapphire Preferred
2. Citi ThankYou Premier Card
3. Barclaycard Arrival Plus World Elite MasterCard
4. Capital One VentureOne Rewards Credit Card
5. Starwood Preferred Guest Card from American Express
6. Ink Plus Business Card
7. American Express Premier Rewards Gold Card
8. The Platinum Card from American Express
9. BankAmericard Travel Rewards Credit Card
10. Platinum Delta SkyMiles Credit Card
11. United MileagePlus Explorer Card
Let’s dig in…
Chase’s Sapphire Preferred card is a go-to option for travelers who want to earn Ultimate Rewards points that can be transferred to airline miles or hotel points. New cardholders earn 50,000 bonus points after spending $4,000 on purchases within three months of account opening, and another 5,000 points for adding an additional cardholder who makes a purchase within the same time period. This card offers 2 points per dollar on all travel and dining purchases and 1 point per dollar spent elsewhere. There’s a $95 annual fee for this card that’s waived the first year.
2. Citi ThankYou Premier Card
This card offers new applicants 50,000 ThankYou points after spending $3,000 within three months of account opening. You also get 3x points for all travel, including gas, 2x points at restaurants and on entertainment and one point per dollar spent elsewhere. Most importantly, you can transfer your points to airline loyalty programs and hotels, or redeem them for 1.25 cents each toward airfare, hotels, cruises and car rentals booked through Citi’s ThankYou Rewards Travel Center. There’s a $95 annual fee for this card that’s waived the first year.
This is a great card for a foreign trip for several reasons. In addition to having no foreign transaction fees, it also offers true chip and PIN compatibility, not just chip and signature. Cardholders earn double miles on all purchases, and miles are worth one cent each as statement credits toward travel expenses. Cardholders also receive a 5% rebate on miles redeemed. And as a World Elite MasterCard, it offers travel benefits such as elite status with Avis, National and Sixt rent a car. For more information on these benefits, see my post on World Elite vs. World MasterCard: Benefits and Value.
New Barclaycard Arrival Plus applicants can earn 40,000 bonus miles after spending $3,000 within 90 days of account opening, as well as 12 months of 0% introductory APR on balance transfers made within 45 days of account opening. There’s an $89 annual fee for this card that’s waived the first year.
Capital One deserves a ton of credit for being one of the first card issuers to remove FTFs from its cards. Among its FTF-free offerings is the VentureOne Rewards Card, which currently offers new applicants 20,000 bonus miles after spending $1,000 within three months of account opening, and 1.25 miles per dollar on all purchases. As with the more premium Capital One Venture Rewards Credit Card, miles are worth one cent apiece as statement credits toward travel purchases including airfare, hotels, car rentals and cruises. But unlike Venture ($59; waived the first year), the VentureOne card has no annual fee.
This card has been a favorite of mine (and TPG’s) for years, thanks to the consistently high value of Starpoints. The only complaint I’ve had was the persistent 2.7% foreign transaction fee — that is, until earlier this year, when the card dropped the FTF and added some new benefits, such as Boingo Wi-Fi, complimentary premium in-room internet access and Sheraton Club access for Starwood Preferred Guest Business Credit Card holders. Both versions of this card have a $95 annual fee that’s waived the first year.
6. Ink Plus Business Card
This small-business card from Chase offers an unbeatable 5x Ultimate Rewards points on all office supply purchases as well telephone, television and internet service (on up to $50,000 spent each cardholder year). It also features 2x rewards at hotels and at gas stations, and one point per dollar spent elsewhere. Points are worth 1.25 cents each when redeemed for travel reservations made through Chase’s Ultimate Rewards travel center, or can be transferred to airline miles or hotel points. This card is currently offering new applicants 60,000 bonus points when they spend $5,000 on purchases within three months of account opening. There’s a $95 annual fee for this card.
This card is perfect for those who can’t quite swallow the Platinum card’s $450 annual fee and are instead more interested in earning bonus Membership Rewards points than receiving airport lounge access. The Amex PRG offers 3x points for airfare purchased directly from airlines, 2x points at US restaurants, gas stations and supermarkets and 1 point per dollar on all other purchases. This card has a $100 annual fee credit, which works just like the Platinum card’s $200 fee credit and helps to offset the $195 annual fee.
Amex seemed to hold on to the FTF on this card for several years after its competitors had ditched theirs, but it finally relented a few years ago. That’s a good thing, because the Platinum’s benefits are numerous — they exceed the space available for me to describe them all. Highlights include a $200 annual airline fee credit, a $100 Global Entry fee credit and access to Delta Sky Clubs, Amex Centurion and Priority Pass Select lounges. Throw in numerous travel discounts, purchase protections and travel insurance benefits, and this card maintains a high place on the list of the top premium travel-rewards cards. To most frequent travelers, it’s easily worth the $450 annual fee.
This was one of the first credit cards to offer an EMV smart chip along with no annual fee or foreign transaction fee, and it still offers competitive value for a no-fee card. New applicants earn 20,000 bonus points after making $1,000 in purchases within 90 days of account opening, worth $200 in statement credits toward travel purchases. This card offers 1.5 points per dollar spent on all purchases, and Bank of America customers can earn a 10% bonus on their rewards.
Delta has many loyal customers, perhaps despite its SkyMiles program rather than because of it. The Platinum Delta SkyMiles Credit Card occupies a sweet spot in its lineup of four consumer and three small business SkyMiles cards. The big value here is the companion certificate (for domestic coach flights, not including Basic Economy fairs) that’s offered each year upon renewal. Other value comes from its sign-up bonus of 5,000 Medallion Qualifying Miles (MQMs) and 35,000 bonus miles after spending $1,000 miles on your card within the first three months. It also offers an additional 10,000 MQM/bonus miles after spending $25,000 in a calendar year, and another 10,000 MQM/bonus miles after reaching $50,000 within a calendar year. There’s a $195 annual fee for this card.
The killer feature with this card is the unpublished benefit of increased saver award availability for cardholders, which greatly increases the value of United miles earned from all other sources. Other benefits include a free checked bag, priority boarding and two one-time-use United Club passes each year. This card is currently offering new applicants 30,000 miles after spending $1,000 within the first three months. There is a $95 annual fee for this card that’s waived the first year.
Regardless of your travel goals or your airline of choice, there’s bound to be a perfect FTF-free credit card for you. Thankfully, issuers are catching on and dropping these useless fees, and many of TPG’s top travel rewards cards already have a place on this list.
What’s your favorite travel rewards card with no foreign transaction fee?
Chase Sapphire Preferred® Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||16.24%-23.24% Variable||Introductory Annual Fee of $0 the first year, then $95||0%||Excellent Credit|