Best 0% foreign transaction fee credit cards – how to save money when shopping abroad

8 min Read Published: 02 Aug 2021

No foreign transaction fee credit cards When you are shopping abroad, you are likely to be charged a foreign-transaction fee when using your credit card. This can add a significant amount to your bill over the course of your holiday or business travel. However, there are credit cards that don’t charge a foreign-transaction fee, which can save you money.

What is a foreign-transaction fee?

A foreign-transaction fee is a charge added to every credit card purchase you make when you're abroad. This includes all spending, whether that is for goods in shops, at restaurants and bars or for services. The fee is made up of two parts:

  • A fee charged by your credit-card network (for example, Mastercard, Visa or American Express)
  • A fee charged by the credit-card issuer (for example, Santander or Barclaycard)

The total charge is generally around 2-3% of the cost of the purchase.

It is worth noting that you may also be subject to a foreign-transaction fee when buying items online that are listed in a different currency. There may also be a lower level of fee applied if you are shopping in a European country compared with other parts of the world.

For fee-free credit cards, the foreign-transaction fee will be waived.

What exchange rate will I get on my credit card?

Visa and Mastercard have their own exchange rates, which are based on the daily price for different currencies. They aim to create the “perfect” exchange rate and, in most cases, it will be the best rate you can get on the market. For this reason, it tends to be the most cost-effective way of spending money abroad, unless you are particularly skilled at timing currency market fluctuations and opt to take the money out in cash.

A trap to avoid when buying goods or services in a foreign currency is opting to pay in sterling rather than local currency. While it may be tempting in a shop or restaurant to pay in sterling so you don't have to work out the currency conversion, that convenience comes at a price. The retailer will use a system called Dynamic Currency Conversion, which converts the price into sterling but at a far from competitive rate. You will also certainly end up paying more paying in sterling than you would in the local currency.

Which are the best credit cards with no foreign-transaction fee?

In the table below, we highlight the best cards with no foreign-transaction fees, with options for different types of card users. The choices are based on the cost, the additional perks and features and the specific travel benefits.

Name of card  Representative APR Annual fee Additional perks  Best for...
 

Aqua Advance

34.9% £0 Capacity to reduce APR over 3 years. Free access to CreditView credit report Those committed to using the card responsibly to reduce the APR and improve credit score
 

118 118 Money 

34.0% £0 No fees and guaranteed APR and credit limit Those wanting certainty on rate, with no hidden fees
 

Santander All in One

23.7% £36 0% on balance transfers for 26 months (no balance-transfer fee), 0% on purchases for 20 months, 0.5% cashback on purchases Those looking for a raft of benefits, including interest-free periods and cashback
 

Barclaycard Rewards 

22.9% £0 Fee-free cash withdrawals from ATMs abroad, 0.25% cashback on purchases Shoppers wanting cashback without an annual fee
 

Tymit 

19.8% £0 Fee-free cash withdrawals worldwide (up to £200 per month) Those wanting to make payments in instalments

Best for those with poor credit scores

Aqua Advance credit card Aqua Advance

Representative APR: 34.9% variable

Annual fee: £0

Additional perks: Reduce your interest rate over 3 years if you stay within your credit limit and make all repayments on time. Free, unlimited access to you credit report with CreditView.

118 118 Money review 118 118 Money 

Representative APR: 34.0% variable

Annual fee: £0

Additional perks: Unlike many other cards, it offers a guaranteed APR and credit limit if you are accepted for the card. In addition to not charging foreign-transaction fees, it also doesn't charge fees for cash withdrawals, balance transfers or late payments.

Best for those looking for rewards/cashback

Santander All in One Santander All in One

Representative APR: 23.7% variable

Annual fee: £36

Additional perks: 0% on balance transfers for 26 months (no balance-transfer fee), 0% on purchases for 20 months, 0.5% cashback on purchases, 15% cashback with certain retailers through the Retailers Offer scheme

Barclaycard Rewards credit card Barclaycard Rewards 

Representative APR: 22.9% variable

Annual fee: £0

Additional perks: Fee-free cash withdrawals from ATMs abroad, 0.25% cashback on your day-to-day spending, both at home and abroad

Best for those looking to pay off spending in instalments

Tymit credit card Tymit 

Representative APR: 19.8% variable on purchases split between 3-36 instalments

Annual fee: £0

Additional perks: Fee-free cash withdrawals worldwide (up to £200 per month), repay anything on the card in 3 month instalments at 0% APR, manage your balance and "bundle" different spending on the user-friendly app

Advantages of no foreign-transaction fee credit cards

  • They can save you money as, although the fee may be quite small for each payment, it can soon add up over the course of a trip
  • As with other credit cards, it offers you section 75 protection on purchases between £100 and £35,000
  • By using one of these cards and opting to pay in the local currency , it gives you the competitive exchange rate offered by your credit card network

Disadvantages of no foreign-transaction fee credit cards

  • Some cards only offer fee-free spending within Europe, so make sure you check the terms and conditions before taking out the card
  • Although there are some cards that offer additional benefits and interest-free periods, many cards only offer travel benefits, which limits there usefulness for day-to-day use
  • Unless the card offers fee-free cash withdrawals, it can work out expensive to take out money when you're abroad. It will almost certainly be cheaper to withdraw cash using a debit card as the fee will typically be between 1-3% but you won't have to pay interest on the money you take out

Alternatives to no foreign-transaction fee credit cards

We outline other travel credit card options, including credit, debit and prepaid currency cards in our review "Compare the best travel credit cards".