How to Avoid Foreign Transaction Fees When You Travel or Send Money Abroad

Foreign transaction fees are charges your bank or payment provider adds when you spend money outside your home country

Most banks charge between 1% and 3% of the transaction amount, though some charge a flat fee per transaction instead. The fee appears on top of the exchange rate your bank uses, so you pay twice: once in the conversion itself, and again in the markup. A $100 purchase abroad can cost you $103 to $104 by the time the fee hits your statement.

The fee exists because your bank has to move money across currency systems and international payment networks. That costs them something, and they pass it to you. But you have real choices about whether to pay it at all, and those choices depend on what you're doing abroad — spending in stores, withdrawing cash, sending money to someone else, or paying bills back home.

Key Takeaways

• Banks charge foreign transaction fees on card purchases, cash withdrawals, and wire transfers, but the fee structure and size varies by bank and by transaction type.
• No-fee checking or savings accounts exist at some banks and credit unions, and they eliminate the foreign transaction fee entirely on debit card purchases.
• Using a local ATM in the country you're visiting often costs less than using your home bank's ATM, because the local bank's fee is usually smaller than your bank's fee.
• Prepaid travel cards and currency exchange services can avoid bank fees altogether, but they charge their own markups on the exchange rate instead.
• The cheapest option depends on what you're doing: a no-fee debit card for shopping, a local ATM for cash, and a wire transfer service for sending money to someone else.

No-fee bank accounts eliminate the charge on debit card purchases

Some banks and credit unions offer checking or savings accounts with no foreign transaction fee. When you use the debit card from one of these accounts to buy something abroad, the bank does not add a percentage on top of the purchase. You still pay the exchange rate the bank uses that day, but nothing extra.

These accounts are most common at online banks and at credit unions. Charles Schwab Bank, for example, does not charge a foreign transaction fee on debit card purchases or ATM withdrawals anywhere in the world. Some credit unions offer the same benefit to members. Call your bank or credit union and ask directly: "Do you charge a foreign transaction fee on debit card purchases made outside the United States?" If they say no, you have found your answer.

The catch is that you need to open the account before you leave. You cannot call from abroad and open a new account in time for your trip. If you already have a no-fee account, use that debit card for all your purchases while you travel. If you do not, you can still open one before your next trip.

ATM withdrawals cost less at local banks than at your home bank's machines

When you need cash abroad, your bank will charge you a fee to withdraw from an ATM that is not theirs. But the local bank that owns the ATM will also charge a fee. You end up paying both. The local fee is usually smaller — often $1 to $3 — while your bank's fee is often $3 to $5 per withdrawal.

To cut the cost, use an ATM owned by a local bank in the country you are visiting, not an ATM owned by your bank. You will still pay the local bank's fee, but you will avoid your bank's fee. Some banks have partnerships with banks in other countries, so their ATMs are free or cheaper abroad. Ask your bank whether they have a partnership network in the country you are visiting.

Withdraw larger amounts less often rather than small amounts many times. If you withdraw $200 once, you pay one fee. If you withdraw $50 four times, you pay four fees. The tradeoff is carrying more cash, which has its own risk, so choose based on how safe you feel and how long you are staying.

Prepaid travel cards shift the fee from per-transaction to the exchange rate

A prepaid travel card is a card you load with money before you leave home. You use it like a debit card abroad. The card company does not charge a per-transaction fee, but they do charge a markup on the exchange rate — meaning the rate they give you is worse than the real market rate.

The markup is usually 1% to 3%, which is similar to what a bank charges in fees. The advantage is that you know the cost upfront: you load $1,000 and you know exactly how much foreign currency you get. With a bank debit card, the fee does not show up until your statement arrives. The disadvantage is that if you do not spend all the money, you may have to pay a fee to convert the leftover balance back to your home currency.

Prepaid travel cards work best if you know exactly how much you will spend and you want to avoid the surprise of fees on your statement. They work poorly if you might need to withdraw cash or if you are not sure how long you are staying.

Wire transfers and money-sending services have their own fee structure

If you are sending money to someone else in another country — not spending your own money while traveling — your bank's wire transfer fee is separate from a foreign transaction fee. A wire transfer typically costs $15 to $50 depending on your bank, plus the bank takes a markup on the exchange rate.

Money-sending services like Wise, OFX, or MoneyGram often charge less than banks for the same transfer. They charge a flat fee (often $1 to $10) plus a smaller exchange rate markup. If you are sending $500 or more, these services are usually cheaper than your bank. For smaller amounts, the flat fee makes them less attractive.

The time it takes also varies. A bank wire can take 3 to 5 business days. Some money-sending services deliver the same day or next day, but charge more for speed. If the person receiving the money needs it urgently, the faster service may be worth the extra cost.

Credit cards abroad often have higher fees than debit cards

Credit cards typically charge a foreign transaction fee just like debit cards do, and the fee is often the same percentage. The difference is that the fee gets added to your credit card balance, so you pay interest on it if you do not pay off the card in full.

Some credit cards marketed to travelers have no foreign transaction fee. These are usually premium cards that charge an annual fee of $95 to $450. The no-fee benefit only saves money if you travel frequently enough that the savings exceed the annual fee. If you travel once a year, a premium card probably costs you more than it saves.

For a single trip, use a debit card from a no-fee account if you have one. If you do not, use a prepaid travel card or withdraw cash from a local ATM. Save the credit card for emergencies or for purchases you cannot make any other way.

Currency exchange services and airport kiosks charge the highest markups

Exchanging cash at an airport kiosk, hotel desk, or currency exchange shop costs significantly more than any other method. These places charge markups of 5% to 15% on the exchange rate, meaning you get much less foreign currency for your home currency than you would at a bank or ATM.

Use these services only if you have no other choice — for example, if you arrive at an airport late at night and need cash immediately and there is no ATM available. For any planned trip, withdraw cash from an ATM or use a debit card instead. The difference in cost is substantial enough to be worth the planning.

Frequently Asked Questions

Do I have to pay a foreign transaction fee if I use my debit card?

Not if your bank does not charge one. Some banks and credit unions have accounts with no foreign transaction fee on debit card purchases. You need to check with your specific bank or credit union to find out whether they offer this. If they do not, you can switch banks before your trip or use a different payment method.

What is the difference between a foreign transaction fee and an exchange rate markup?

A foreign transaction fee is a percentage or flat charge your bank adds on top of the transaction. An exchange rate markup is the difference between the real market exchange rate and the rate your bank gives you. Both cost you money, but they are separate charges. A no-fee account eliminates the fee but not the markup.

Is it cheaper to exchange money before I leave or after I arrive?

It depends on the method. Exchanging at an airport kiosk or hotel is expensive no matter when you do it. Withdrawing from a local ATM after you arrive is usually cheaper than exchanging cash before you leave, because ATM fees are smaller than exchange shop markups. If your bank has no foreign transaction fee, using your debit card is cheapest of all.

Can I avoid foreign transaction fees by using my phone to pay?

Phone payment apps like Apple Pay or Google Pay still go through your bank or card issuer, so the foreign transaction fee still applies if your bank charges one. The fee is the same whether you tap your phone or insert your card. A no-fee bank account eliminates the fee regardless of how you pay.

What should I do if I get charged a foreign transaction fee I did not expect?

Contact your bank and ask them to explain the charge. If you used a debit card and your account is supposed to have no foreign transaction fee, ask them to reverse it. Banks sometimes make mistakes, and they will often remove the fee if you ask. Keep your receipt from the purchase so you can show them the amount and the date.