Survey Finds Foreign Transaction Fees May Surprise Majority of Cardholders
When considering a new credit card it’s likely that consumers will evaluate some of the various perks, including cash back, airline miles, and more. However an emphasis on these benefits may cause them to overlook certain fees — especially if they don’t believe such costs will affect them. Considering that a new report from the personal finance site WalletHub found that 80% of those surveyed were unaware that foreign transactions fees might apply to them even if they never left the country, it seems that this is one area where cardholders could use some educating.
So what is a foreign transaction fee? The majority of banks and credit card issuers charge users such a fee for purchases made in foreign currencies. Typically this fee is assessed as a percentage of your purchase, with WalletHub pegging the average at 1.5%. As mentioned, while these types of fees are mostly associated with travel, domestic cardholders making purchases from internationally-based companies online may also incur fees. That’s something the vast majority of respondents were unaware of — in fact half were unable to say for sure if their credit cards charged foreign transaction fees.
Speaking on the findings of the study, Indiana University scholar and commercial law fellow Sarah Jane Hughes noted, “Consumers often do not know this until they spot the foreign transaction fee listed separately on a bill. She went on to explain that this lack of knowledge is likely not the fault of the card issuers, saying “I would be surprised if these fees are not correctly disclosed in credit card agreements, because that is required. Some consumers may not have read the entire set of disclosures or have read only the parts they thought they had interest in at a particular time.” Similarly, Sherrill L. Shaffer of the University of Wyoming told WalletHub, “It is a challenge of public education to make people aware of the possibility of such fees and to prompt them to become informed regarding their own credit cards.”
Although most credit and debit cards do incur foreign transaction fees, WalletHub did find that four of the top 10 largest credit card issuers — Capital One, Discover, USAA, and Barclay — didn’t charge these fees on any of their cards. Meanwhile the other six top issuers had at least some card products that waived foreign transaction fees. Even lowest-ranking issuer Wells Fargo was found to offer 0% foreign transactions fees on 1/5 of their cards.
Looking outside of just foreign transaction fees and considering other travel perks, policies, and more, WalletHub found that the best issuers for travelers were USAA, Capital One, Barclays, and Bank of America. However it’s important to remember that while foreign transaction fees may be one figure to watch out for, you’ll also want to look out for things like annual fees and interest rates, while also weighing any cash-back or point benefits. Ultimately this latest survey is another great reminder to carefully review the terms of your current credit card and any future cards you might apply for.