American Express foreign transaction fee — The only guide you’ll need

TransferWise content team
04.08.19
5 minute read

International travel is one of the great joys in life. You know you’ll have to pay for your airplane ticket and your lodging, but no one wants to rack up unnecessary charges like transaction fees. Much better to spend that money on something fun like elephant rides and parasailing excursions.

This article will explain how to avoid foreign transaction fees with American Express cards. Those are the surcharges applied to purchases made on your credit card in international locales. They tend to be a percentage in the single digits. It might not sound like much, but it can add up quickly when applied to things like car rentals.

Different credit cards have different uses. You can find cards with both high fees and high rewards; others have low fees but few rewards. The important thing to keep in mind is that different cards are suited to different spending habits. Some cards are proper cards to use for travel because they come with travel rewards and light fees, and others are better to use on a daily basis.

We’ll cover the following topics.

  • The basics of American Express credit card foreign transaction fees
  • When is the foreign transaction fee charged?
  • What other fees do I need to know about?
  • Dynamic Currency Conversion

American Express Credit Card Foreign Transaction Fees — The Basics

The best credit cards for international travelers are ones that don’t carry foreign transaction fees. American Express offers an array of cards. Some with foreign transaction fees, and some with none. This handy table offers an overview of different American Express cards and their fees.

Card Name Rewards Foreign Transaction Fee Annual Fee
American Express Cash Magnet Card¹ ² Once you charge $1,000 in purchases to your card in the first three months, receive $150 cash back. 2.7% of each transaction after conversion to US dollars. No
American Express Gold Card Earn 50,000 rewards points after you spend $2,000 in the first three months. None $250
American Express Platinum Card Earn 60,000 rewards points after you spend $5,000 in the first three months. None $550
American Express Gold Delta Sky Miles Earn 35,000 bonus miles after you spend $1,000 in your first month. None $95, first year waived.

When is the foreign transaction fee charged?

For cards that carry a fee on foreign transactions, you can expect to be charged foreign transaction fees when you make a purchase in another country. This can also be a purchase that you make online. They aren’t a flat fee, like a few dollars, but a percentage of your purchase. The typical fee percentage for American Express cards is 2.7%. Apply to that to an espresso in Rome and you’re talking about a few cents. But apply it to a car rental or hotel stay, and suddenly foreign transaction fees are taking quite a bite out of your travel budget.

What other fees do I need to know about?

Credit cards are a helpful personal finance tool, but they can come attached with additional fees beyond foreign transaction fees. Common fees are an annual percentage rate, a penalty fee applied to late payments or payments returned by the bank, balance transfer fees, and cash advance fees.

Like credit fees, currency exchange rates are another travel expense that eat into your budget. When you travel to a foreign country, you need to have your cash exchanged into the native currency before you can spend it. Exchange rates are always changing, and you can find the real exchange rate of a currency pair on Google or at TransferWise’s helpful currency converter.

Any currency pair has two values at a given time: the “buy” value (the price you buy a currency at) and the “sell” value (the price you buy a currency at)

Currency exchange services make their money by tilting the exchange rate in their favor when converting currency. If you check the exchange rate of a currency exchange company, you’ll find that exchanging your currency with them will result in you receiving less cash back than if you had used the “real” exchange rate at Google.

So when looking for a reliable currency vendor, try to find one with an exchange rate closest to the real, mid-market rate.

One foolproof way to do that is to use a TransferWise multi currency account. TransferWise provides borderless account holders with personal financial details for multiple countries. That allows you to access cash from the US, UK, Australia, and anywhere in the European Union, pay no bank fees, and get the cash in local currency at the mid-market exchange rate. It’s a wonderful deal for world travelers.

Even better news: TransferWise will soon be releasing its own debit card through Mastercard. The TransferWise debit card will allow you to pay in local currencies when traveling, withdraw up to $250 every day for up to 30 days, convert your money at the real mid-market exchange rate, and convert your money to a different currency for only a small conversion fee (from 0.35% and 2.85%). To join the waitlist for the TransferWise debit MasterCard, go here.

Dynamic currency conversion — keep an eye out

When traveling, you’ll often need to get extra cash, and the most convenient way to do that is at an ATM. But smart travelers need to be careful with ATMs.

First, if you are traveling from another country, an ATM will often give you the option of receiving a payout in your home currency. While this sounds like a convenient service, it’s worth asking why a financial company would give you that option. Surprise, surprise, they tend to benefit more than you. Banks can take a hefty chunk of change out during this currency exchange.

This apparent “service” often goes by the name “Dynamic Currency Conversion.” While it may seem like a good deal for the end customer, choosing to take a payout in your home currency allows the bank to set its own currency rate, and build hidden fees into that rate. When banks offer payout in your home currency through Dynamic Currency Conversion, they’re not looking out for you.

When an ATM gives you the option to be charged in your home currency or the local currency, always choose the local currency. Don’t trust an ATM to do your currency conversion.

American Express offers a strong selection of preferred cards for the international traveler. They offer two cards with a solid credit line, strong redemption options and rewards incentives, and reliable service without having to pay any foreign transaction fees when traveling. Imagine how much money you can save not having to pay 2.7% of a good or service every time you make a transaction. In exchange for an annual fee, the American Express Gold and American Express Platinum cards will allow you to travel carefree, knowing you won’t be charged an extra fee for every swipe.

Also, keep TransferWise in mind for a host of your financial needs when traveling. You can use the TransferWise currency converter to know the fair exchange rate, the borderless account to receive currency payouts at the real exchange rate, and the upcoming TransferWise debit card to make purchases directly from your borderless account. They make managing your money on the go easier, cheaper, and more transparent.


Sources:

  1. https://card.americanexpress.com/d/cash-magnet-credit-card/
  2. https://www.americanexpress.com/us/credit-cards/card-application/apply/prospect/terms/american-express-cash-magnet-card/28009-10-0#offer-terms
  3. https://card.americanexpress.com/d/platinum-charge-card/gold-card/?utm_mcid=3559149&utm_source=google&utm_medium=cpc&utm_term=%252Bamerican%2520%252Bexpress%2520%252Bgold%2520%252Bcard&utm_cmpid=697971503&utm_adgid=38024364884&utm_tgtid=kwd-23328948937&utm_mt=b&utm_adid=335218379451&utm_dvc=c&utm_ntwk=g&utm_adpos=1t1&utm_plcmnt=&utm_locphysid=9023896&utm_locintid=&utm_feeditemid=&utm_devicemdl=&utm_plcmnttgt=&gclid=CjwKCAiAqt7jBRAcEiwAof2uKwx62c3ULLujrGw8Fk-01a8ZbvsJ6sFzcQxgZbI1T99LeK_QYPWOJhoCL3gQAvD_BwE
  4. https://www.americanexpress.com/us/credit-cards/card-application/apply/prospect/terms/gold-card/59000-10-0/#FeeTable
  5. https://card.americanexpress.com/d/platinum-charge-card/
  6. https://www.americanexpress.com/us/credit-cards/card-application/apply/prospect/terms/platinum-charge-card/28009-10-0
  7. https://card.americanexpress.com/d/delta-reserve-credit-card/?utm_mcid=3559068&utm_source=google&utm_medium=cpc&utm_term=%2Bamerican%20%2Bexpress%20%2Bdelta%20%2Breserve&utm_cmpid=697971359&utm_adgid=50188441659&utm_tgtid=kwd-343563842341&utm_mt=b&utm_adid=335351161108&utm_dvc=c&utm_ntwk=g&utm_adpos=1t1&utm_plcmnt=&utm_locphysid=9023896&utm_locintid=&utm_feeditemid=&utm_devicemdl=&utm_plcmnttgt=&gclid=CjwKCAiAqt7jBRAcEiwAof2uK8Cj6xWmGQMQrZCIr0uACdn0s6TEti58_OFbxx2VTjucH31CYHhZ0hoCIFwQAvD_BwE
  8. https://www.americanexpress.com/us/credit-cards/card-application/apply/prospect/terms/delta-gold-credit-card/59000-10-0/#FeeTable

All sources last checked 4 April 2019


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