Many run-of-the-mill credit cards tend to charge a foreign currency conversion fee. Such a fee occurs when you’re in a foreign country or buying from an overseas website, and the credit card company charges you for the privilege of having them convert from say, United States Dollars to Australian Dollars.
This means that aside from the exchange rate, you’ll also have to contend with this fee. The forex fee is often around 3%, meaning a $100 purchase actually costs you $103, plus whatever the exchange rate is doing at the time. In fact, the conversion fee can be bundled in to the exchange rate when you look at your statement, so it can be very easy to gloss over the fact you’re paying this.
Compare Credit Cards With No Foreign Transaction Fees
Below are a handful of credit cards with no foreign currency conversion fees.
Considerations when using a credit card with no currency conversion fees
As the old saying goes, there’s no such thing as a free lunch. When you’re shopping around for a credit card with no currency conversion (a.k.a foreign exchange) fees, it’s important to consider a few things.
Interest Rate
You may have noticed the more perks you get on your credit card, the higher your interest rate. Many of the lowest rate cards do not tend to have perks such as zero currency conversion fees. While this is likely not a problem if you pay off your bill in-full every interest-free period, you could get stung if you let that bill run a bit loose. Many of the lowest interest rate credit cards feature purchase rates less than 10% p.a., versus 19% p.a. or more for cards with no currency conversion fees.
Features & Perks
As said before, something has got to give, and the more perks you have on your credit card, the higher your interest rate could be. On the flip side, many of the cheaper credit cards with no currency conversion fees have comparatively few extra perks. If you’re using your credit card for travel, generally you’ll have to decide whether you value airline points and lounge access, or zero currency conversion fees. Many of the fanciest cards still attract conversion fees of 3% or more.
Annual Fee
If you’re just going to be using your card for occasional travel or online purchases, and purchasing online from overseas, it hardly makes sense to spend, say, $200 on an annual fee when you’re only going to be saving $100 in currency conversion. You’ll have to do the maths yourself here - a credit card with no annual fee could end up working out better than one with no currency conversion fees, or vice versa. Luckily, many credit cards feature both, so you don’t necessarily need to compromise.
Shopping Online - Beware of the Hidden Currency Conversion Fee
The site you’re purchasing from looks Australian, you’re shopping in Aussie Dollars, and the URL has .au or /au so why are you being charged currency conversion fees?
Aha, you’ve stumbled upon a neat little trick websites use. For all intents and purposes, the site looks Australian, but payments are actually routed through an overseas website or payments system, which can trigger currency conversion fees.
This is especially the case with American-owned companies, where the ‘Aussie’ site is just a skin and you’re actually purchasing through the US system. From this author’s personal experience, Adobe, the publisher of Photoshop and Lightroom, charges a currency conversion fee, despite the website looking Australian. Usually this is listed in the fine print, so if unsure, double check, and shop diligently!
Article first published 26 February 2021, last updated 30 June 2021.
Photo by Louis Magnotti on Unsplash
Brooke Cooper
Harrison Astbury
Jacob Cocciolone
