What is the foreign exchange rate on a credit card?
A credit card conversion fee, more commonly called a foreign transaction fee, is an extra charge by your credit card issuer for processing a transaction with a foreign merchant. It's usually 1%-3% of what you spend.
Say you used a Visa credit card abroad. On your statement, those transactions would be converted from the currency of the country where they were made to dollars, using rates set by Visa. Those rates appear on your statement.
Depending on the credit card you use when traveling abroad, you could pay fees that total 6% or more of purchases. Using a credit card with no foreign transaction fees and choosing to make purchases in local currency will nearly always save you money.
An international transaction fee is a commonly encountered type of credit card fee that you may be subject to if you use your credit card at a non-Australian retailer. This fee is charged by your credit card issuer and is typically a percentage — typically around 3% — of the purchase amount.
| Card | Exchange rate | APR |
|---|---|---|
| Santander All in One Credit Card | Mastercard rate | 21.9% |
| Bip Cardless Credit | Mastercard rate | 29.9% |
| Zopa Credit Card | Visa rate | From 24.9% |
| Metro Bank Credit Card | Mastercard rate | 14.9% |
Yes, credit card companies automatically convert foreign currencies to the domestic currency using their exchange rate.
You can avoid your credit card's foreign transaction fee entirely by paying for purchases in foreign countries using the local currency instead of your U.S. credit card (or American dollars, if the vendor accepts them.) This isn't a perfect solution, however.
If you have a Visa card, you'll pay the Visa exchange rate and Mastercard holders will pay Mastercard's exchange rate. In general, Mastercard tends to offer a marginally better exchange rate than Visa. That means your holiday spending will be slightly cheaper with a Mastercard credit card than a Visa credit card.
If you buy foreign currency with your credit card you will be charged: On your credit card — buying foreign currency is treated as a cash withdrawal. This means you will incur a cash advance fee and daily interest charges.
If you're planning a trip abroad, it's worth picking a credit card designed for overseas spending which may well come with low or no foreign transaction fees, and ways to earn extra rewards when you spend in a foreign currency.
How do I get the best foreign exchange rate?
Head to your bank or credit union before you leave to avoid paying ATM transaction costs. You may even receive a better exchange rate. Credit unions and banks will exchange your dollars into a foreign currency before and after your trip when you have a checking or savings account with them.
Local banks and credit unions usually offer the best rates.
The best place to exchange foreign currency in the U.S. is at your local bank or credit union before you leave for your trip.
There are five cards that do not charge a foreign transaction fee. They are the Scapia Federal Bank Credit Card, Axis Bank Burgundy Private Credit Card, RBL World Safari Credit Card, Club Vistara IndusInd Explorer Credit Card, and IDFC First Wow Credit Card.
| Credit card | NerdWallet rating | Rewards rate |
|---|---|---|
| Chase Sapphire Preferred® Card Apply Now on Chase's website on Chase's website | 5.0/5 Best for Bonus travel rewards | 1x-5x Points |
- Discover it® Cash Back: Best for rotating category rewards.
- Discover it® Miles: Best for first-year value.
- Discover it® Student Cash Back: Best for students.
- American Express® Gold Card: Best for travel rewards on dining.
- Chase Sapphire Reserve®: Best for luxury perks.
Will My Bank Card Work in Europe? Debit cards with a Mastercard or Visa logo are widely accepted in Europe. American Express is somewhat less common, except at tourist destinations. Most banks charge a foreign transaction fee and/or a currency conversion fee, so it is worth double-checking these costs before departure.
Though there may be a small fee if you exchange less than a certain amount, your bank or credit union will almost always be the cheapest place to exchange currency. You may be able to order currency at a branch location, by phone, or online to have it delivered to you or to pick up at a branch.
The best place to get foreign currency is likely the cheapest, that being to directly contact your bank or credit union. Banks are less likely to add additional fees on top of the already metamorphosing exchange rates. If you don't have time, though, you can always try a kiosk at the airport just for the hell of it.
Because merchants pay commissions to credit-card companies, small European businesses (B&Bs, mom-and-pop cafés, gift shops, and more) often prefer that you pay in cash. Vendors might offer you a discount for paying with cash, or they might not accept credit cards at all.
Is it cheaper to use cash or credit card overseas?
Advantages of an overseas card
The main advantage of using a debit or credit card overseas is that you won't pay foreign transaction fees every time you spend. While many also won't charge fees for cash withdrawals, you will still usually be charged interest from the date of the transaction if you use a credit card.
Typically, the least busy times of the week are Mondays, mid-week and the weekend (excluding Friday). These days have the lowest number of transfers in the week, so you might expect to see less fluctuation in the mid-market rate.
Ordering currency from your bank before you travel is almost always better than using the airport currency exchange. Sally French is a travel rewards expert who joined NerdWallet in 2020.
Exchange at a Financial Institution or AAA: Usually, banks and credit unions and your local AAA have more reasonable fees and exchange rates than companies that are solely dedicated to foreign currency exchange.
A currency conversion fee is charged by the card or ATM network for converting one currency to another. It's usually around 1% of the purchase amount. Not only does Capital One not charge foreign transaction fees—it doesn't charge currency conversion fees either. (View important rates and disclosures.)
