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foreign transaction fee

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Definition: A foreign transaction fee, also called currency conversion fee, is a fee credit card issuers charge when you use your credit card internationally, or even when you make a purchase that uses a foreign bank. For example, you might face a foreign transaction fee if you book a flight through Singapore Airlines, even if you're sitting in front of your computer in Springfield, Missouri.

Foreign transaction fees are between 1 and 3% of the transaction depending on your credit card issuer and payment processing network (Visa, MasterCard, Discover or American Express). Some card issuers charge a base fee plus a percentage of the transaction. Some premier credit cards don't charge a fee at all. In 2006, some of the major credit card issuers had to pay a settlement to cardholders because the issuers hadn't told cardholders they would be charged a fee. Now these fees are disclosed in the credit card agreement. Read your credit card agreement to find out the exact fee your credit card issuer can charge.

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