Credit Cards with no foreign transaction fee

If you travel overseas frequently, or even if you enjoy online shopping on international websites, then paying by credit card could see you hit with a foreign exchange fee of 3% or more. The good news is that there are cards that do not have this fee. So, you can spend money overseas without your bank taking a slice of your money. Note that the may, however, charge a fee for a cash advance, such as an ATM withdrawal.

Foreign Transaction Fee

When making a transaction in a forreign currency, the transaction will need to be converted into Australian Dollars. This is done prior to appearing on your credit card statement. This conversion is made by the card scheme – depending on your card, this will be either Visa or Mastercard.

The exhange rate used is set by the relevant scheme, and both schemes publish the exchange rate. These are available online , and you can find them at either the MasterCard or Visa websites.

In determing the date that is used, this is normally the settlement date.  This can be a few days after the actual transaction date, and is a little out of your control

Once that conversion is made, many card issuers will then add on a fee, which can exceed 3% of the Australian Dollar amount. Part of this fee (about 1%) is payable as an assessment fee to the scheme, while your bank pockets the rest.

A card that promotes itself as foreign transaction fee free will not charge this additional fee. They will simply pass on the Australian Dollar amount of the transaction, as determined by Visa or Mastercard.

What Cards are Available?

There are a small group of credit cards on the market that offer a foreign currency conversion free of the transaction fee. Some of these are shown in the following table