What are foreign transaction fees and how do they work?
When you make a purchase in another currency, some banks and card companies charge a fee to facilitate the transaction. And while fees on foreign transactions are common, some financial institutions offer this service at no extra cost.
What is a foreign transaction?
A foreign transaction is an electronic payment made in a currency other than your own. Here are some types of foreign transactions:- ATM withdrawals in a foreign country
- Online card payments in currencies other than your banking currency
- Payments made while abroad
- International money transfers
Foreign transaction fees: A breakdown
Foreign transaction fees are often charged by a bank or card company on any transaction made outside your currency or region of use. The total fee charged is generally broken down into two parts.
- First, there’s a currency conversion fee for transferring the money from one currency to another, typically around 1%.
- Second, there’s the transaction processing fee (usually around 2%) charged by the bank or card company for providing an international service.
Foreign transaction fees—a breakdown
There are traditionally two parts to foreign transaction fees that combine to make up the total fee charged to your account. First, there’s a currency conversion fee charged for transferring the money from one currency to another, typically around 1%.Second, there’s the transaction processing fee, usually around 2%, charged by the bank or card company for providing an international service.
Why do we pay foreign transaction fees?
A foreign transaction fee is designed to cover the cost of the process of translating one currency into another through a foreign channel or bank. Unlike normal transfers, transfers between currencies are complex, involve more channels, and take longer, resulting in higher fees. If you’re planning to send money abroad, make sure to take variables such as currency conversions and transaction fees into account to avoid any unpleasant surprises. Learn more about transaction fees abroad and how they work here.Avoiding extra foreign transaction fees abroad
There are several ways to avoid extra foreign transaction fees. For example, try bringing a no-fee debit card when you travel, withdrawing currency ahead of your trip, and avoiding multiple visits to foreign ATMs. It’s also a good idea to pay cash in the local currency to sidestep any transaction fees on site.Foreign transactions—currency exchange rates
In addition to watching out for high foreign transaction fees, it’s important to consider currency exchange rates when making foreign transactions. These rates are based on the global trade markets and are used to calculate the sender’s currency into the recipient’s. Need a refresher on foreign currency exchange? Check out our handy guide here.
Do all companies charge foreign transaction fees?
Not all card companies charge foreign transaction fees—some absorb the costs themselves. To learn what fees you might be subject to, it’s a good idea to review the ‘Fees’ section in the bank or card issuer’s Terms and Conditions. At N26, all account holders can make card payments overseas for free, with no foreign transaction fees on top. Bank account with travel insurance N26 You and premium account N26 Metal members can also make unlimited ATM cash withdrawals in any currency for free. To learn more about all the N26 benefits of our accounts when it comes fo foreign transactions, simply click on this link.N26 accounts—free payments worldwide and no hidden fees
At N26, all our accounts feature free card payments worldwide, as often as you like and with no foreign transaction fees. N26 You and Metal account holders can withdraw cash for free at foreign ATMs, while for Standard free bank account, customers are charged a fixed 1.7% conversion fee on the withdrawal amount.
N26 You and Metal: Get unlimited free ATM withdrawals abroad
As an N26 You or Metal customer, not only can you enjoy unlimited free card payments globally, you can also withdraw cash in any currency as often as you want — free of charge. You’ll also get real-time exchange rates when making international transfers. Plus, you’ll benefit from a travel insurance package that includes trip cancellation and medical coverage.Foreign transactions include any transactions made in a currency other than your own, such as cash withdrawals, card payments when traveling, or an online purchase from a foreign retailer.
A foreign transaction fee is charged by a card company or financial institution on transactions made abroad or with a foreign vendor. Fees are usually between 1% and 3% of the transaction value, though some card companies charge fixed rates.
Not all card companies charge foreign transaction fees. With N26, all account holders can make unlimited card payments abroad and overseas, completely free of charge.
No. All N26 account holders can make unlimited free card payments abroad — no strings attached. N26 You and N26 Metal customers can make unlimited ATM withdrawals abroad, while all Standard and Smart account holders incur a small fee.
N26 You and Metal cardholders are never charged to make ATM cash withdrawals, regardless of the currency or frequency. Standard and Smart account holders are charged a fixed fee of 1.7%.
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