What is the American Express Foreign Transaction Fee?

It’s important to understand if your credit card has a foreign transaction fee before you travel abroad. While Capital One and Discover have no foreign transaction fees on any of their cards, other card issuers, including American Express, waive the fee on certain cards. If your credit card has a foreign transaction fee and you travel abroad, you will need to pay the fee whenever you are charged in the local currency. Here’s how foreign transaction fees work and what American Express charges.

What is a Foreign Transaction Fee?
A foreign transaction fee is a fee you will be charged if you use your American Express card at a non-US merchant. If your American Express card has a foreign transaction fee, it will be 2.7%. This fee will be assessed on every non-domestic transaction, including transactions you make in the United States if the retailer is based in another country. While the fee may seem small, it adds up. For example, if you fly to Sweden and spend $4,000, you will be hit with foreign transaction fees totaling $108.

What About Currency Conversion Fees?
Most travelers focus on whether their card has a foreign transaction fee, but there’s another fee you may be paying without realizing it. When you exchange your cash for the local currency — or have a transaction on your credit card run as converted to U.S. currency when it’s charged– you will be hit with a currency conversion fee. While this term is often used interchangeably with the foreign transaction fee, they are very different.

The currency conversion fee is charged to convert an overseas transaction into U.S. dollars. If you’re in Sweden, this means your transaction will show up in USD on your statement instead of krona. Some merchants will charge a huge mark-up on dynamic currency conversion (DCC) and use a less-than-favorable conversion rate compared to your card issuer’s.

Overseas merchants will ask you before converting the transaction and you will be able to see the conversion rate. Compare it to your issuer’s DCC rate. In most cases, it’s not worth it — especially if you have a card with no foreign transaction fee!

You May Pay Both Fees!
If you have an American Express card that has a foreign transaction fee (see partial list below), it is possible to pay both a foreign transaction fee and currency conversion fee on overseas transactions. The DCC will be paid in USD, but the foreign transaction fee can be incurred if your card charges any foreign fees. The only way to avoid both fees is to choose an American Express card with no foreign transaction fee like those listed below and declining the DCC when the merchant asks.

This can potentially save you a bundle. Along with skipping American Express’s standard foreign transaction fee of 2.7%, you will also avoid the additional DCC fee that may range from 1% to 6%, depending on the merchant.

Do All American Express Cards Have a Foreign Transaction Fee?
It’s important to note that not all AmEx cards charge a foreign transaction fee. A growing number of credit cards designed for frequent travelers have been getting rid of this common fee. Here are some popular American Express cards with no foreign transaction fee:

• American Express Delta SkyMiles Platinum, Gold, and Reserve cards. This includes both Consumer and Business cards.
• Starwood Preferred Guest card
• Consumer and Business American Express Platinum card
• Business Gold Rewards card
• American Express Plum card for businesses
• Premier Rewards Gold card

Many of the most popular American Express cards for consumers do have a foreign transaction fee of 2.7%. This includes the EveryDay, EveryDay Preferred, Blue Cash EveryDay, Blue Cash Preferred, AmEx Green, and Hilton HHonors cards.

If you frequently travel abroad, it’s in your best interest to choose a card with no foreign transaction fee to save yourself hundreds on your next trip.