What is a Foreign Transaction Credit Card Fee?

If you have recently traveled abroad and used your credit card while you were on your trip, you may have been surprised to find a foreign transaction fee on your credit card statement. It is not a mistake. This is a legitimate fee that issuers top up many credit cards and unfortunately it is not one that you can easily have waived after the fact.

A foreign transaction fee is a charge credit card company if you use your credit card internationally or if you make a purchase that uses a foreign bank. For example, you might face a foreign transaction fee when you book a flight through Singapore Airlines, even if you are in front of your computer in Springfield, Missouri. The fee is charged for the convenience of converting the foreign currency into US dollars and makes the price of an international trip more expensive.

 

How Much is the Foreign Transaction Fee?

How Much is the Foreign Transaction Fee?

Visa and Mastercard charge a 1 percent foreign transaction fee and many credit card companies add an additional percent stapling. This will make your foreign transaction fee between 1 and 3 percent of the transaction, depending on your credit card company and payment processing network. American Express charges a 2.7 percent fee on some of their credit cards and waives the fee on others. Do not discover any foreign transaction fee on one of your credit cards. Some leading and travel rewards credit cards charge no fee at all and even absorb some or all of the fee charged by payment processing network.

 

So check if your credit card charges a fee

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Credit card companies are required to disclose the foreign transaction fee to you. In 2006, some of the major credit card companies had to pay a cardholder settlement because the issuers would not have told cardholders if they had charged a fee. Now these fees are revealed in the credit card contract. Read your credit card contract to discover the exact fee from your credit card issuer to calculate foreign transactions. If you don’t have a copy, you can find one on your credit card issuer’s website or the federal credit card contract database. You can also call your credit card issuer to find out if your credit card has a foreign transaction fee and if you can expect to pay it.

 

How To Avoid Foreign Transaction Fees

How To Avoid Foreign Transaction Fees

There are many credit cards that do not charge a foreign transaction fee, so consider opening this before an international trip. Both Capital One and Discover have removed the foreign transaction fee from all of their credit cards, so if you already have one in your wallet you can swipe on your trip knowing you won’t be charged any additional fees. You can also choose to use cash or other currency on your vacation to avoid the fee altogether, but be aware that carrying cash can be unsafe. If your money is stolen, you can no longer recover the funds. With a credit card, on the other hand, you are not responsible for fraudulent charges as long as you report theft in a timely manner.

8 Reasons Why Your Credit Score May Dropped

If you are in the habit of monitoring your credit score often or you signed up for credit score notifications, then you know how your credit score changes over time. While you are excited about an increase in your credit score, you are equally alarmed about a drop in your credit score.

The credit score calculation system is very complex and it can be difficult to pinpoint the exact reason for a credit score drop. Your credit score is based on the information in your credit report. Therefore, if your credit score drops unexpectedly, it is usually due to a change in the information in your credit report. And it doesn’t have to be a big change for your credit score. Here are a few possible reasons your credit score might drop.

 

Your payment is more than 30 days late

credit payment

Payment history always has the biggest impact on your credit score. Credit card and loan payments that are more than 30 days late are reported to the credit bureaus and are reflected in your credit score. Once the late payment hits your credit report, your credit score will most likely drop.

 

They made an expensive purchase

Another important factor in your credit score is how much of the available credit is used – your credit utilization. It comes as a surprise to many people but if you make a big purchase on your 1 month credit card you can see a drop in credit score even if you pay the balance in full on your due date.

This happens because the credit card issuers typically report the credit card balance to the last day of the billing cycle. The balance on your credit card statement is often the balance that appears on your credit report.

The good news is that it is easy to correct the effects of a high balance. Simply pay the balance down immediately, avoid making other credit card purchases and waiting. This will help you recover lost credit score points.

 

Your Unpaid Account War: Collection Sent

credit score

To protect your credit score, it is important that you pay all of your accounts, not just your credit cards and loans. If you fall behind on payments to your non-credit accounts (like your monthly phone bill), the bad balance could be sent to a debt collection agency and contained on your credit report. Once a collection shows on your credit report, it will almost certainly drop your credit score.

 

Your last collection Dropped Off Your Credit Report

When calculating credit scores, FICO places people in different buckets known as scorecards. Your credit profile is compared to other people in your scorecard to come up with your credit score. While you can have a credit card at the top of one scorecard with the collection on your credit report, you can drop to the bottom of another scorecard if negative information falls off your credit report.

This type of credit score drop is out of your control. Fortunately for you, as long as you keep paying your bills on time and keep your debts low, your credit score will improve.

 

You have a new application for credit

loan application

Every time you apply for credit in a new application, a request is added to your credit report. Since inquiries make up 10 percent of your credit score, applying for new credit can affect your credit score.

Inquiries only affect your credit score for a year, so if the only inquiry is you, your credit score should increase steadily and have recovery in 12 months.

 

One of your credit limits has been lowered

A lower credit limit has the same effect as charging an expensive item. If you have a balance on a credit card with a low credit limit, your credit usage will go up and your credit score will go down.

 

You closed a credit card or one was canceled

You closed a credit card or one was canceled

Closing a credit card can hurt your credit score, especially if the card has a balance. Credit card companies can also cancel your credit card, which will not necessarily affect your credit because it was the creditor who closed the account, but because the account was closed at all.

 

Your bankruptcy fell away your credit report

If bankruptcy drops your credit report after seven years, you will likely move to a new credit scorecard. You could see a drop in your credit score because now your credit performance is being compared to other people who have not filed for bankruptcy.