Foreign transaction fees, and the currency question you should always answer the same way

A purchase abroad can be charged twice, by two different parties, for the same conversion. One of the two is printed in your card terms and you agreed to it. The other is offered to you on a screen in a shop, and you can refuse it.

The fee your issuer charges

A foreign transaction fee applies when a transaction is in a currency other than your card's, or is processed through a bank outside your country. It is a percentage of the converted amount, and it is card-specific rather than bank-specific.

These are figures read from the issuers' own product pages, with the date each was read.

Two things are visible in that table that no general article about travel money will tell you.

The spread between the cheapest and the dearest of these is roughly double, and it does not track the prestige of the card. And several of these fees apply to cash withdrawals abroad as well as purchases, which stacks on top of the cash advance charges that withdrawal already triggers.

The markup the till adds

Dynamic currency conversion is the offer to bill you in your home currency at the point of sale. The terminal shows a familiar figure, the decision feels helpful, and the conversion has quietly moved from the card network to the merchant or the ATM operator.

Visa describes the mechanism and the protections around it. The offer "includes exchange rate and additional fees", and "Merchants and ATMs should give you a choice to accept or decline currency conversion and must not choose on your behalf." ¹ Visa also says providers "should not use language or procedures such as different font size or color to influence your decision", and requires the exchange rate used and any markup to be displayed on screens and receipts. ¹

That last requirement is the one to use. If a screen offers you a home-currency amount, the rate and the markup are supposed to be on it. Read them, then press the local currency button anyway.

Why declining is right even on a no-fee card

The two charges are independent. Declining conversion does not remove your issuer's foreign transaction fee, and holding a card with no such fee does not stop a merchant adding its own markup.

So the rule has no exceptions worth remembering. Pay in the currency of the country you are standing in, and let the network convert.

Where this bites that people do not expect

• ATMs abroad, which present the same offer, and where the withdrawal is already a cash advance.
• Foreign websites that detect your location and quote your home currency by default.
• Airlines and hotel booking sites billing from a different country than the one you are in.
• Subscriptions billed in a foreign currency, where the fee applies every month rather than once.

Where CardLab helps

Which of your cards is cheapest abroad is a fact about the cards you hold, and the answer is usually not the one you assume.

CardLab stores the foreign transaction fee for each card alongside its earn rates, with the issuer page and the exact sentence the figure was read from, and the date it was read. Every rate and fee figure above came out of that catalog, which is how a post can compare eight cards across four countries without asking you to trust a table somebody typed.

The catalog is published for 17 markets, and Best Card ranks the cards you actually hold rather than the cards somebody is paid to feature. In markets with no published catalog, the tracker still works, because it computes from the terms you enter yourself.

Before a trip, the useful five minutes is checking which of your cards has the lowest foreign fee, and whether it is also the one with the travel earn rate. Often it is not, and the cheaper card wins, because a fee of a few per cent outruns a reward of a few per cent on the same spending.