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One of my foremost considerations when I spend money abroad is to avoid foreign transaction fees, which can easily wipe out the value you get from earning points and miles. Today, TPG Senior Points & Miles Correspondent Jason Steele offers his picks for cards that avoid these fees, and offers a rosy outlook for the future of international credit card transactions.
Do you despise being charged something for nothing? So do I, which is why I’ve been a passionate opponent of credit cards that charge mindless “foreign transaction fees” since I started writing about the industry years ago.
Thankfully, the tide is now turning decisively against these junk fees, according to a new survey by CreditCards.com showing that major issuers now offer 20 more cards without foreign transaction fees than were available during the last survey in 2012. Today I want to take a brief look at my 10 favorite travel rewards credit cards that have dropped these fees, and then use my crystal ball to predict which products will be the next to follow.
My 10 Favorite Travel Rewards Cards with No Foreign Transaction Fees
1. Chase Sapphire Preferred Card — This card has had no foreign transaction fees since it was introduced, and offers 2x Ultimate Rewards points on dining and travel expenses. There’s a $95 annual fee (waived the first year).
2. Ink Plus Business Card — This business card features a lucrative bonus of 5x Ultimate Rewards points on telecommunications charges and at office supply stores, along with 2x at gas stations and hotels. This card also has a $95 annual fee.
3. Southwest Rapid Rewards Premier Credit Card — I love the fact that the sign-up bonus counts toward Southwest Companion Pass status. There is a $99 annual fee for this card, but it comes with an anniversary bonus of 6,000 Rapid Rewards points that comes close to offsetting the fee.
4. The Platinum Card from American Express — The $550 annual fee for this card is pricey, but it offers a long list of features and benefits that justify its cost. The Business Platinum Card from American Express (with a $450 annual fee) offers benefits like free Boingo WiFi membership, 10 Gogo inflight Internet passes each year, and access to discounts offered by the OPEN savings program.
5. IHG Rewards Club Select Credit Card — This card offers 5x points at IHG properties and 2x points at gas stations, grocery stores, and restaurants. Plus, it comes with a valuable free night award every year. There is a $49 annual fee for this card that’s waived for the first year.
6. Chase Hyatt Credit Card — Not only does this card offer a sign-up bonus of two free nights at any Hyatt property (after you make $2,000 in purchases on the card in the first 3 months after account opening), it also grants instant Discoverist status, as well as 2x points for purchases from restaurants, airlines, and rental car companies. There is a $75 annual fee for this card.
7. Barclaycard Arrival Plus World Elite Mastercard — This card offers double miles on all purchases, and each mile is worth one cent as statement credits toward travel related expenses. In addition, cardholders receive a 10% rebate on redeemed miles, making this card an outstanding value. Finally, this is the rare card that offers true chip and PIN compatibility, which is a great feature for overseas travel. There’s an $89 annual fee for this card that is waived the first year.
8. Capital One Venture Rewards Credit Card — This card also offers double miles on all purchases, and miles are again worth one cent apiece as travel statement credits. The $95 annual fee for this card is waived the first year.
9. Citi Premier Card — Starting on April 19, this card will offer 3x ThankYou points on travel and gas expenses, and 2x points at restaurants. These points are especially valuable now that you can transfer them to 11 airline programs plus Hilton Honors. There is a $95 annual fee for this card that is waived the first year.
10. Premier Rewards Gold Card from American Express — In February, American Express announced that it will drop the foreign transaction fees on this card starting on June 1, 2015. The card will also add a $100 airline fee credit, similar to the $200 credit offered by the Platinum card. Unchanged are the 3x Membership Rewards points from airline purchases and 2x points at U.S. gas stations and supermarkets. The annual fee for this card will rise slightly from $175 to $195, but you’ll only be charged the old fee if you open an account before June 1.
10 Credit Cards We Hope Will Drop Foreign Transaction Fees This Year
The trend over the last several years has been toward dropping foreign transaction fees, and it seems focused on travel rewards cards favored by international travelers. These customers are heavily affected by foreign transaction fees, and are the most likely to leave a card at home when faced with an extra 3% (or 2.7%) tacked on to purchases made outside the U.S.
Based on trends that I have observed (and perhaps a few little birdies whispering in my ear), here are 10 travel rewards credit cards that I predict will be the soon ditch foreign transaction fees altogether.
1. Starwood Preferred Guest Credit Card from American Express — This is my favorite travel rewards card of all time, but I refuse to use it outside of the United States due to its onerous 2.7% foreign transaction fee. While other Amex cards (including the Platinum, Premier Rewards Gold, and even many of the Delta SkyMiles cards) have dropped these fees, the extra charges persist in this product. I think foreign transaction fees will go away this year, but perhaps at the cost of a slightly higher annual fee.
2. Chase Freedom — While this is not a travel rewards card, strictly speaking, it’s a very popular product from one of America’s largest credit card issuers. Savvy cardholders know that Freedom earns rewards in the form of Ultimate Rewards points, which can be moved to a Sapphire Preferred or Ink Plus account and then transferred to airline or hotel partners. If Chase were to eliminate foreign transaction fees on Freedom, it would become a must-have card even for the international jet set.
3. Amex Everyday and Amex Everyday Preferred Cards from American Express — The standard Everyday card is the only card with no annual fee that offers transferable points. The Preferred version (which has $95 annual fee) offers as much as 4.5x Membership Rewards points at supermarkets, which is very impressive. Not so impressive is the fact that Amex introduced this card with its standard 2.7% forign transaction fee. Since this card is due for a mild refresh in the next year, I wouldn’t be surprised to see those fees disappear.
4. Virgin Atlantic Black and White cards from Bank of America. Although these cards are clearly targeted at international travelers, they still have foreign transaction fees. The fee is only 1%, but since there are so many Bank of America cards that don’t have foreign transaction fees, I expect these to follow suit.
5. Alaska Airlines Signature Credit Card from Bank of America. Alaska isn’t a big international carrier, but it does offer service to Mexico and is partnered with several international airlines. This card is clearly marketed to those who travel outside the U.S., but it still has a 3% foreign transaction fee, the elimination of which is way overdue in my opinion.
6. Club Carlson Premier Rewards Visa Signature Card — Since the best Club Carlson properties are overseas, it’s a shame that this card still imposes foriegn transaction fees. The fee is normally 3%, or 2% if the transaction is processed outside the country but still in U.S. Dollars (as if that makes any difference). Since this card recently lost its incredibly valuable last night free benefit, eliminating these fees would help soothe the pain.
7. Citi / AAdvantage Platinum Select World Elite Mastercard — This is a really strong airline card that offers great perks like free checked bags, priority boarding, and a 10% rebate on redeemed miles. American Airlines and its partners offer many international routes, but my card will remain safely at home until the 3% foreign transaction fee is removed. Since Citi has eliminated those fees on some of its other travel rewards cards, I predict it will do the same on this card before long.
8. Hilton Honors Surpass Card from American Express — This is a premium travel rewards card co-branded with a major international hotel chain, and it competes with the Citi Hilton HHonors Reserve Card, which has no foreign transaction fees. So it seems like this card should be near the top of Amex’s list of products that will soon say goodbye to the 2.7% foreign transaction fee.
9. Ink Business Cash Credit Card — This is an outstanding card that offers 5x rewards on telecommunications and office supply purchases, and 2x at gas stations and restaurants, all with no annual fee. Nevertheless, it still charges a 3% foreign transaction fee, which Chase must realize is inconsistent with its target market of savvy small business owners.
10. American Express Gold Card — If Amex doesn’t drop its foreign transaction fees from its Everyday cards, it has to do so with its Gold card. Otherwise, this card (with its $125 annual fee) is not nearly as good a deal as its less expensive siblings. Sure, it offers a few extra travel insurance and purchase protection benefits, but it might be the most expensive card offered that still hits cardmembers with that useless fee.
Which cards would you like to see drop their foreign transaction fees?
Know before you go.
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