Foreign Transaction Fee – How does it Work with Credit Cards?

Posted on Thursday, July 25th, 2024 | By IndusInd Bank

When you make a purchase that involves an international merchant, you may see extra charges in your credit card statement. These are called foreign transaction fees. It is crucial to know how such credit card international transaction charges work. This can help you make better financial decisions.

Here’s a detailed look at foreign transaction fees on credit cards and how to handle them.

Understanding Foreign Transaction Fees on Credit Cards

The below points explain how foreign transaction fees work in credit cards:

• Banks levy fees when you purchase in a foreign currency or through a foreign bank. 

• These fees can be a certain percentage of the total transaction amount. It covers the cost of converting foreign currency into your home currency. Hence, some may also refer to it as foreign exchange charges on credit cards. 

• Some banks may also have a fixed fee. They might charge a specified fee for every international transaction on the credit card regardless of the transaction amount. 

• There may also be dual fees some times. A fixed fee may also apply, besides a percentage of the transaction amount. 

• Here’s an example of how such charges work: 

Imagine you travel to Europe and purchase a souvenir worth €100 with your credit card. If your card charges a 2% foreign transaction fee, you will incur an additional €2 fee. 

The bank converts this €2 fee into INR (₹) as per the prevailing foreign exchange rates. Some banks may have their own currency exchange rates. 

It is advisable to get clarity on international transaction charges on your credit card before you make such a transaction. 

Also Read: All You Need to Know About Travel Credit Cards

How to Manage Foreign Transaction Fees

Here are some strategies to manage a credit card foreign transaction fee:

1. Choose the Right Credit Card

Opt for credit cards that offer low foreign transaction fees. IndusInd Bank offers travel-friendly Credit Cards designed to minimise these charges. These cards cater to frequent travellers and international shoppers. You can also enjoy travel-related perks such as air miles, frequent flyer program memberships, and airport lounge access with these Credit Cards.

2. Monitor Exchange Rates

Stay informed about current exchange rates to understand the cost of foreign purchases in your home currency. Some currency conversion apps can help you with rates and costs.

3. Plan for Cash Withdrawals

Plan your cash withdrawals during international travels. Some credit cards offer favourable terms for foreign ATM withdrawals. Nevertheless, it is advisable to familiarise yourself with the terms and potential fees involved.

4. Review Credit Card Statements

Review your credit card statements to track foreign transaction fees. Contact your bank immediately if you notice any undue foreign exchange charges on your credit cards.

5. Check for Exemptions

Some credit card companies may waive certain fees for specific purchases or travel-related expenses. Review your card’s terms and conditions to see if you qualify.

IndusInd Bank offers a range of credit cards with features designed to help you manage foreign transaction fees. With a Credit Card from IndusInd Bank, you can enjoy the following benefits:

• Reward points for everyday purchases 
• Reward points that do not expire 
• Discounts and privileges on travel expenses 
• EMI, No-Cost EMI, and other flexible repayment options 
• Worry-free transactions with improved card security. 

Conclusion

Understand and manage foreign transaction fees on credit cards to save money. 

IndusInd Bank offers a range of credit cards online for your travelling and lifestyle experiences. Applying for an IndusInd Bank Credit Card is easy, instant, and 100% digital!  

Apply for a Credit Card online with IndusInd Bank now.

Disclaimer:

The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.