I paid foreign transaction fees at home — reader mistake story

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Update: The Wells Fargo Propel American Express® card is no longer open to new applications. View the current offers here.

Today, I want to share a story from TPG reader Rachel, who got hit with an unexpected surcharge on a recent transaction:

I, like many people, had been reading about the awful bush fires in Australia. I did my research and found a group I wanted to donate to where I felt confident my money would make an impact. I put many charitable donations on my Chase Freedom Unlimited card, so I did the same with this donation.

My mistake was that I completely forgot I was going to get slapped with a foreign transaction fee! I use other cards when I travel overseas, so I didn't consider that I could incur a foreign transaction fee while I was sitting in my own living room. It was worth the cost to help out Australia, but I could have saved myself some money.

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Many credit cards incur foreign transaction fees when you use them internationally, but as Rachel learned, those fees may apply even when you (and your card) are at home or paying in your home currency. Credit card transactions are processed electronically, so your physical location isn't the determining factor. Instead, the location of the merchant — or in some cases the location of the bank that processes your payment — dictates whether foreign transaction fees will be assessed on your purchase.

Avoiding fees from online transactions can be tricky, since you can't always discern where merchants and payment processors are on the map. Many merchants (including travel providers and charitable organizations) operate websites in multiple countries, so transactions you expect to be processed domestically may actually be processed elsewhere. Booking a hotel room abroad is a common example, as U.S. cardholders are routinely charged foreign transaction fees even when making reservations and payment through a U.S. website.

Your best bet to avoid foreign transaction fees is to simply use a card that doesn't charge them. This feature is becoming more prevalent, and is no longer strictly the domain of premium and mid-tier credit cards. Plenty of cards with no annual fee also don't charge foreign transaction fees, such as the Capital One VentureOne Rewards Credit Card, Wells Fargo Propel American Express® card and Bank of America® Travel Rewards credit card. If you don't already have a card that waives foreign transaction fees, consider adding one to your portfolio, especially if you travel or make purchases abroad regularly.

Related: Best credit cards to use for charitable donations

I appreciate this story, and I hope it can help other readers avoid making the same mistake. In appreciation for sharing this experience (and for allowing us to post it online), I’m sending Rachel a gift card to enjoy on future travels, and I'd like to do the same for you. Please email your own travel mistake stories to info@thepointsguy.com, and put "Reader Mistake Story" in the subject line. Tell us how things went wrong, and (where applicable) how you made them right. Offer any wisdom you gained from the experience, and explain what the rest of us can do to avoid the same pitfalls.

Feel free to also submit your best travel success stories. If your story is published in either case, I’ll send you a gift to jump-start your next adventure. Due to the volume of submissions, we can't respond to each story individually, but we'll be in touch if yours is selected. I look forward to hearing from you, and until then, I wish you a safe and mistake-free journey!