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Check your credit card agreements before you travel

If you only use your credit cards in California, you shouldn’t have any foreign transaction fees. But what happens if you take your credit card to a U.S. territory that is off the mainland? You may be surprised to find out that some credit card companies charge foreign transaction fees even when you pay in U.S. dollars.

The reasoning behind foreign transaction fees

A foreign transaction fee is a charge added to purchases made in a foreign country. The thinking behind these charges is that there are expenses associated with converting currency. While currency conversion may sound like a reasonable excuse for a charge, some credit card companies still tack on foreign transaction fees even when a foreign payment is made in U.S. dollars.

Check your credit cards before you travel

One woman who traveled to the Turks and Caicos Islands was surprised to see that her Bank of America Visa bill had a foreign transaction charge for $5.90. When the woman called to explain that the Caribbean island she visited used U.S. dollars, the bank told her that the fee was not a mistake, and it could not be waived. However, other credit cards that the woman used on her vacation did not charge the same type of fee.

Not all credit cards have foreign transaction fees

In an effort to stay competitive among frequent travelers, some credit card issuers do not charge any foreign transaction fees. Even when transactions do involve currency conversions, some banks will cover the associated cost as an added benefit for their customers. Since frequent travelers are usually people with high incomes, credit card companies aim to cater to their needs.

Look into your cardholder agreement

If you suspect that there are foreign transaction fee errors on your credit card statement, you may want to look at the language in your cardholder agreement. This legally binding document should explain all of the terms and conditions of your credit card, including an explanation of foreign transaction fees. An attorney may help you understand the terms and dispute any unfair charges.