Foreign Transaction Fees Explained

Most credit cards are expensive to use abroad because they charge a fee on non-sterling transactions. Foreign transaction fees will add an average of 3% to any purchase or cash withdrawal you make when overseas. Despite the magnitude of these fees, you may be unaware of them since the details are buried deep in a card's terms & conditions. Anyone who likes to travel can avoid these unnecessary charges—we'll show you where to find them and the best alternative cards for travel.

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A foreign transaction fee is a bank charge that appears on your bill after you use your debit or credit card abroad. Foreign transaction fees (also known as FX fees or non sterling transaction fees) are typically charged on purchases and/or cash advances (e.g., a cash withdrawal from an ATM).

What's the average foreign transaction fee?

The average FX fee on most credit cards is 3%. The exception to this is specialist no-fee travel credit cards, which typically don't charge an FX fee on purchases made abroad in the local currency. These cards may or may not charge an FX fee on cash withdrawals from ATMs abroad.

FX Fee on Purchases

Let's look at an example. Imagine that you pay €115 (say this is equivalent to £100) for a dinner in Spain on regular credit card, incurring a 3% fee for the bank to handle the foreign transaction. The actual cost of your dinner is then £100 + (0.03 x £100) = £103.

An extra £3 charge for every £100 spent might not sound like a lot, but the fees can add up if you're a big spender or if you travel abroad a lot.

By using a specialist credit card for travel that doesn't charge a foreign transaction fee, you'll effectively save you 3% on all foreign purchases—so that dinner will cost you £100 instead of £103. Over the course of a week-long holiday, the savings in fees could be enough to pay for a meal!

Example of Credit Card FX Fees
Cost of a meal in a restaurant€115/£100
Non sterling transaction charge (3%)£3
Total cost of your dinner£103

FX Fee on Cash Withdrawals

Cash withdrawals from ATMs abroad are known to be expensive, because:

  • Credit cards, even specialist "travel" cards, may charge an FX fee on cash withdrawals
  • Credit cards typically also charge a cash withdrawal fee, which is subject to a minimum charge
  • Interest on cash withdrawals starts accruing immediately
  • Interest on cash withdrawals is usually charged a higher rate
  • ATMs may charge an additional fee on top of all this

Let's look at an example of a cash withdrawal of €115 (assume equivalent to £100) from a local ATM. You may be charged both a foreign transaction fee and a cash withdrawal fee. The actual cost to you will be £100 + (0.03 x 100) + (0.03 x 100) = £106. Again, there are some specialist travel credit cards that will not charge either an FX fee or a cash fee, so your withdrawal will just cost you £100.

Some ATMs will charge a fee for using their machine. This fee has nothing to do with your credit card. This fee will be apparent to you when you try to withdraw cash, as the ATM will alert you before you proceed with the transaction.

How to Find Out Your Card's Non-Sterling Transaction Fee

The foreign transaction fee can be hard to find, if you don't know where to look. We've found the easiest way is to check the Summary Box on the issuer's web page for your particular credit card. You'll need to scroll to the bottom of the Summary Box where you should see a section labeled: "Non-sterling transactions" or "Foreign Usage."

Non-sterling transaction and cash withdrawal fees should be listed there. If you do not see a cash withdrawal fee in this section, you may find the relevant information in the "Fees" section located above.

Remember, for purchases abroad you only worry about the non-sterling (foreign) transaction fee. For cash withdrawals abroad you need to check both the non-sterling (foreign) transaction fee, the cash withdrawal fee and the cash interest rate. Specialty travel cards may say "None" for one or both of these fees, which means you won't be charged any fees by your card. The following image is from Halifax's travel Clarity Credit Card, showing that the card doesn't charge any fee for purchases or cash withdrawals in a foreign currency abroad.

An image showing that the Halifax Clarity Credit Card charges no non-sterling foreign transaction or cash withdrawal fees
From the Summary Box of the Halifax Clarity Credit Card, showing No Foreign Transaction Fees or Foreign Cash Withdrawal Fees

What is Dynamic Currency Conversion?

When you make a purchase or pay for a meal overseas, the local business will give you the option of paying sterling or in the local currency.

It's nearly always better to pay in the local currency. Why?

Paying in pounds sterling instead of the local currency means the transaction is subject to Dynamic Currency Conversion (DCC). DCC means the retailer or ATM company get to choose the exchange rate for your transaction. It is not uncommon for them to add a fee for doing this exchange or for them to set an exchange rate that benefits them, not you.

When you pay for a purchase or withdraw local currency from an ATM while abroad, you'll be asked if you want the transaction to appear in pounds sterling or in the local currency—always say the local currency. This way you avoid DCC and instead rely on Visa, Mastercard, or American Express to set your exchange rate. These companies are known for setting fair exchange rates that are very close to market.


A non sterling transaction fee is a percentage charged on each transaction that you make in a currency other than your home currency. Most UK credit and debit cards charge a 3% non sterling transaction fee when you use your card abroad and pay in the local currency.
The Halifax Clarity, Santander Zero, Santander All In One, Barclaycard Rewards and Aqua Advance are some of the specialist credit cards for travelling abroad that don't charge non sterling transaction/FX fees in the UK.
You can avoid paying a non sterling transaction fee by using a special travel credit card[symbol:m-dashs]there are half a dozen credit cards for travelling abroad that don't charge FX fees in the UK.