In today’s globalized world, credit cards have become an essential financial tool for travelers and online shoppers who purchase in foreign currencies. However, foreign transaction fees on credit cards can add unexpected costs, making international transactions more expensive.
This comprehensive guide will help you understand what are the foreign transaction fees on credit cards, how these fees work, their impact on foreign transactions, and effective ways to avoid them.
Table of contents
- What are Foreign Transaction Fees on Credit Cards?
- How Do Foreign Transaction Fees Work with Credit Cards?
- List of Foreign Transaction Fees on Credit Cards
- Factors Influencing Foreign Transaction Fees
- How to Avoid Foreign Transaction Fees on Credit Cards
- Are Foreign Transaction Fees Worth Paying?
- FAQs on Foreign Transaction Fee on Credit Cards
What are Foreign Transaction Fees on Credit Cards?
Foreign transaction fees on credit cards are the charges imposed by banks and credit card issuers when you make purchases in a foreign currency or through an overseas merchant. The foreign transaction fees on credit cards in India typically range from 0% to 3.5% of the total transaction amount.
The purpose of foreign transaction fees on credit cards is to cover the cost of currency conversion and payment processing through global networks such as Visa, Mastercard, and American Express.
Some credit card issuers waive foreign transactions, while many banks or issuers charge a standard fee, making international purchases more expensive.
What is Dynamic Currency Conversion (DCC)
Many merchants offer Dynamic Currency Conversion (DCC), allowing you to pay in your home currency instead of the local one on foreign credit cards.
However, this service often comes with higher exchange rate markups and hidden fees. It is generally advisable to always pay in the local currency to avoid inflated charges.
Also Read: Best International Credit Cards in India 2025
How Do Foreign Transaction Fees Work with Credit Cards?
When you use your credit card for shopping or some transaction on an international website, the payment network converts the purchase amount into your home currency. The card issuer then applies foreign transaction fees on credit cards, which may appear separately on your statement or be included in the total transaction amount.
The foreign transaction fees on credit cards compensate the issuer for the additional expenses incurred during currency conversion and international payment processing.
Let’s take an example of how foreign transaction fees work with credit cards in INR:
- Purchase Amount: EUR 200
- Exchange Rate: 1 EUR = 90 INR
- Converted Amount: EUR 200 x 90 = INR 18,000
- Foreign Transaction Fee (3%): INR 18,000 × 0.03 = INR 540
- Total Amount Charged: INR 18,540
This means that if your bank applies a 3% foreign transaction fee on credit card transactions, you will end up paying INR 540 extra on an INR 18,000 transaction.
If you frequently travel or shop on international websites, choosing a credit card with no foreign transaction fees can help you save money.
List of Foreign Transaction Fees on Credit Cards
Some credit card issuers apply foreign transaction fees on credit cards, while others offer zero forex markup options for frequent travelers and international shoppers.
To help you, we have provided a list of credit cards with foreign transaction fees and the best zero forex markup credit cards. Explore the options below and choose the one that best suits your needs.
Foreign Transaction Fees on Credit Cards by Indian Banks
| Bank | Credit Card | Foreign Transaction Fee |
| Axis Bank | Magnus Credit Card | 2.00% |
| Axis Bank | Reserve Credit Card | 1.5% |
| BoB | Eterna Credit Card | 2.00% |
| BoB | Varunah Premium Credit Card | 2.00% |
| HDFC Bank | Regalia Credit Card | 2.00% |
| HDFC Bank | Diners Club Miles Credit Card | 3.00% |
| HSBC India | Premier Credit Card | 0.99% |
| HSBC India | Premier Platinum Debit Card | 3.50% |
| HSBC India | Visa Platinum Credit Card | 3.50% |
| ICICI Bank | General Credit Cards | 3.5% + GST |
| ICICI Bank | Emeralde Credit Card | 1.50% |
| IDFC First Bank | Select Credit Card | 1.99% |
| IndusInd Bank | Legend Credit Card | 1.80% |
| PNB | RuPay Select Credit Card | 3.50% |
| SBI | Elite Credit Card | 1.99% |
| SBI | Aurum Credit Card | 1.99% |
| SBI | Other SBI Credit Cards | 3.50% |
| Standard Chartered | Ultimate Card | 2% |
| YES Bank | YES FIRST Preferred Credit Card | 1.75% |
| Other Banks | Various | 0% – 3.5% |
Zero Forex Markup Credit Cards in India
Some Indian banks offer credit cards with zero foreign transaction fees, which are ideal for frequent international travelers:
| Credit Card | Foreign Transaction Fee | |
| IDFC FIRST | Wealth Credit Card | 0% |
| IDFC First Bank | Wow Credit Card | 0% |
| IndusInd Bank | Crest Credit Card | 0% |
| HDFC Bank | Infinia Credit Card | 0% |
| RBL Bank | World Safari Credit Card | 0% |
| Axis Bank | Burgundy Private Credit Card | 0% |
| IndusInd Bank | Club Vistara IndusInd Bank Explorer Credit Card | 0% |
| SBM Bank | Niyo Global Card | 0% |
| Federal Bank | Scapia Federal Bank Credit Card | 0% |
Please note that foreign transaction fees can vary based on the specific card variant and the bank’s policies. It’s advisable to verify the exact fees and benefits associated with a particular credit card by consulting the official website of the respective bank or contacting their customer service.
Also Read: Debit Card Foreign Transaction Fees: Bank-wise Schedule of Charges
Factors Influencing Foreign Transaction Fees
Foreign transaction fees on credit cards are not fixed and can vary based on multiple factors. These fees are applied when you make purchases in a foreign currency or with international merchants, and the total cost can depend on your card issuer, payment network, and currency exchange fee rates.
Here are several factors that determine the foreign transaction fee on your credit card:
- Card Issuer Policies – Different banks have varying fee structures. Some may charge high fees, while others offer zero forex markup credit cards.
- Payment Networks – Visa, Mastercard, and American Express have different agreements affecting transaction costs.
- Currency Exchange Rates – Some credit card companies add a markup on exchange rates, increasing the transaction cost.
How to Avoid Foreign Transaction Fees on Credit Cards
Foreign transaction fees can add unnecessary costs to international purchases, making travel and online shopping more expensive. However, by choosing the right financial tools and payment methods, you can avoid these extra charges and save money. Here are some effective ways to avoid foreign transaction fees on credit cards.
- Use Credit Cards with No Foreign Transaction Fees: Several banks offer best travel credit cards that waive foreign transaction fees, helping you save significantly on international purchases. You can select a suitable credit card for foreign transactions from the table given in the above table.
- Pay in Local Currency: To avoid extra currency conversion charges, always choose to pay in the local currency when making international purchases.
- Consider Multi-Currency Travel Cards: Travel cards like Niyo Global, Scapia, and forex cards offer competitive exchange rates and help you avoid additional credit card fees.
- Use Digital Wallets and Fintech Apps: Platforms like Wise, Revolut, and PayPal offer low-cost currency conversion and international payments with better exchange rates.
- Check for Hidden Fees in ATM Withdrawals: Some credit cards charge extra fees for ATM withdrawals abroad. Choose debit cards or multi-currency cards that provide fee-free cash withdrawals overseas.
Are Foreign Transaction Fees Worth Paying?
The foreign transaction fees on credit cards are worth paying depending on your spending habits and the benefits offered by your credit card. Here are some important things to consider when doing foreign transactions:
When Foreign Transaction Fees Might Be Justifiable:
- Valuable Card Benefits: Some credit cards that impose foreign transaction fees offer substantial perks, such as higher reward rates, travel insurance, lounge access or exclusive access to events. If the value of these benefits outweighs the cost of the fees, it might be justifiable to use such a card for international purchases.
- Infrequent International Spending: If you rarely make purchases abroad, the occasional foreign transaction fee may not significantly impact your overall expenses. In such cases, the convenience of using your existing credit card might outweigh the minimal fees incurred.
When to Avoid Foreign Transaction Fees:
- Frequent International Transactions: For individuals who often travel or shop with overseas merchants, foreign transaction fees can accumulate quickly, leading to substantial additional costs.
- Availability of No-Fee Alternatives: Many credit cards now offer no foreign transaction fees, providing the same or even better benefits without the extra charges. Opting for such cards can lead to significant savings over time.
Foreign Transaction Fees on Credit Cards can increase the cost of international spending, but with proper planning, you can minimize or avoid them. Opting for credit cards with no foreign transaction fees, using travel cards, and paying in local currency can help you save money while making overseas transactions hassle-free. Always review your credit card terms to ensure you’re getting the best deal for your international purchases.
FAQs on Foreign Transaction Fee on Credit Cards
Foreign transaction fees are charges imposed by banks and credit card issuers when you make purchases in a foreign currency or with an international merchant. These foreign transaction fees on credit cards typically range from 0% to 3.5% of the total transaction amount, depending on the bank and credit card issuer.
The foreign transaction fees on credit cards in India typically range from 0% to 3.5% of the total transaction amount, depending on the bank and credit card issuer.
Banks impose foreign transaction fees on credit cards to cover the cost of currency conversion and international payment processing through global networks like Visa, Mastercard, and American Express.
You can avoid paying foreign transaction fees on credit cards by using credit cards with zero forex markup, paying in the local currency, using multi-currency travel cards, or opting for fintech apps like Wise or Revolut.
DCC allows you to pay in your home currency instead of the local one, but it often comes with high exchange rate markups and hidden fees. It’s generally better to pay in the local currency.
Yes, foreign transaction fees on credit cards apply when you make purchases in a foreign currency, even if the transaction is conducted online from your home country.
Some zero forex markup credit cards include IDFC FIRST Wealth Credit Card, HDFC Infinia, RBL World Safari Credit Card, and IndusInd Crest Credit Card.
Yes, withdrawing cash using a credit card at international ATMs often incurs additional cash advance fees and foreign transaction fees.
No, some banks offer credit cards with zero foreign transaction fees, especially for frequent travelers.
If your credit card offers valuable rewards, travel benefits, or perks that outweigh the cost of foreign transaction fees, it might be worth paying. However, for frequent international spenders, no-foreign-fee cards are a better option.
To learn more about bank accounts for students, the best education loans, forex, banking experience for global students, or international money transfers, reach out to our experts at 1800572126 to help ease your experience with studying abroad.
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