Traveling is fun and exciting, but, nobody likes to come home to a monstrous bill staring at their face. But this can be a very real problem if you love to shop using your American Express credit card while traveling.
The reason for this lies in foreign transaction fees, which are applicable to most traveling cards, including American Express cards. For all the convenience and security that credit cards offer, transaction fees could add quite a bulk to your monthly bill.
Many people forget about foreign transaction fees while planning their traveling budget. If you don’t want extra charges to mess up your budget, read this article to understand all about American Express foreign transaction fees.
Understanding Foreign Transaction Fees
In the simplest terms, the foreign transaction fee is added to your credit card bill every time you make a transaction in a foreign country. For example, if you’re a US citizen traveling abroad, you will be charged this extra fee on your credit card bill for making a purchase in a foreign country.
Many people confuse foreign transaction fees with the currency conversion fee. But, it’s important to understand that you will incur a foreign transaction fee even if you make a purchase in US dollars, but outside the US. You will incur these extra charges every time a transaction is initiated by your routes through a foreign bank.
So even if you buy stuff online from a foreign retailer while sitting in your house in the U.S., transaction fees will eat into your bill. You should also note that this fee is not counted toward reward point accumulation on your credit card.
Why It Is Important to Understand Foreign Transaction Fees
If you are traveling abroad or planning to buy something from foreign retailers online, the chances are that you might have to pay transaction costs. Understanding what a foreign transaction fee is and when it’s charged can help you avoid excess charges.
The transaction fee may not look much when it’s just small purchases of a few dollars. But, in case you plan on paying your hotel bills and traveling costs using your American Express card, it might dig a hole in your pocket. So, being well-informed about foreign transaction charges will come in handy.
American Express Foreign Transaction Charges
Most credit cards, including American Express cards, charge a percentage of the purchase amount instead of a flat fee for foreign transactions.
On average, the American Express foreign transaction fee is about 2.7% of your bill. However, not all American Express cards charge a fee for foreign transactions.
For example, American Express Gold Card, Platinum Card, and Gold Delta SkyMiles cards do not have an active foreign transaction fee. But, at the same time, such cards have an added annual subscription fee ranging from $250 to $550.
On the other hand, there is a 2.7% foreign transaction fee applies to the American Express Cash Magnet Card. This fee is calculated after converting the foreign currency into US dollars (If you’re purchasing in a different currency).
How to Save Money on Foreign Transactions
Foreign transaction fees can really disrupt your budget if you don’t keep a check on it beforehand. You can start by first ascertaining whether foreign transaction costs apply to your American Express card or not.
You can do so by checking the T&C page of the card or contacting a bank website. If your card charges the fee, it’s best to not use it for big purchases (like hotel bills, expensive gifts, and travel).
You can also apply for a new Amex card from the list of options which has no transaction fee. Alternatively, you can opt for a traveler’s check or cash to pay for your expenses.
In case you’re making a purchase online, it’s advisable to check where the merchant is based on their “about” section. It will help you choose an appropriate payment option to avoid extra charges.
The Bottom Line
Often we avoid small costs like transaction fees and focus on bigger expenses. And before you realize it, these small figures might app and eat a significant portion of your finances. That’s why it’s best to keep track of the American Express foreign transaction fee for your card to avoid paying extra.
Disclaimer: All credit products carry risk. Be aware of these risks by reading the associated terms and conditions.