The Sneaky Card Fee That Can Wreck Your Summer Vacation

Traveling abroad is a fantastic way to experience exciting new places, people, and foods. Unfortunately, it's not the cheapest vacation you can take. A typical international trip can cost upward of $270 a day according to some estimates.

With the trip already running you four figures on necessities alone, the last thing you need is an extra credit card fee increasing your costs. Which is why you really need to avoid foreign transaction (FX) fees.

Using a credit card abroad

One of the fun culture shifts that happen abroad is you're now in a different financial ecosystem. The country will have its own banking system and likely its own currency. The really amazing part, though, is that your U.S.-issued credit cards will still work just fine.

A Mastercard is a Mastercard no matter where you are. And the same is true of Visa, Amex, and Discover. As long as the merchant accepts that network, your card will work. (Some issuers don't even require notification of travel, but check with your issuer just in case.)

However, depending on the card you have, you may have to pay an extra fee for using your card out of the country. That's the foreign transaction fee.

Foreign transaction fees 101

Essentially, cards with a foreign transaction fee will charge the fee for any transaction that:

• Is in a foreign currency, or;
• Routes through a foreign bank

So, if your card has an FX fee, simply making a purchase while in another country will trigger the fee whether you purchase in the local currency or in USD because the purchase will still route through the local banking system.

In other words, even your hotel bookings will likely trigger an FX fee because the hotel uses the local banking system. The same could be true of your airfare, as well, though sometimes you can avoid it by purchasing through a domestic airline or booking service.

A 3% fee can add up fast

FX fees can vary a bit, but the most common fee I see is for 3% of the transaction amount. While 3% may not sound like a lot, here's how that adds up over the course of a pricey international trip:

Even -- or, perhaps, especially -- on a budget trip, that FX fee can mean you have to skip the fancy bon voyage dinner before you head back home. Why give that money to the banks if you can use it for yourself instead?!

Avoid the fees by picking the right cards

The only way to avoid foreign transaction fees while traveling is to use a credit card that doesn't charge them. Happily, they're not all that hard to find.

Ideally, choose a great travel rewards credit card. Not only will they nearly always skip the FX fees, but the rewards you earn on your travel purchases will help pay for your next vacation. Plus, the best travel cards include perks that can make your travel even better, like airport lounge access or hotel status.

You don't need a dedicated travel credit card to save on FX fees, however. Several issuers don't charge FX fees on any of their cards, including Discover. You can also choose any card from Capital One. If those don't suit, check out card options from your local credit unions, which tend to charge fewer fees by design.

Traveling abroad is something everyone should do. Experiencing other cultures is a key part of expanding our worldview. But you don't need to also expand your travel budget with nonsense fees, so long as you choose the right cards to pay for your journey.