How FX Fees on Credit Cards Actually Work
When you pay in another currency, several layers of pricing kick in: network rate, issuer markup, “0% FX” campaigns and sometimes dynamic currency conversion. This page breaks down where the cost really comes from.
Explore Travel & FX cards at the hubWhat Is a Foreign Exchange (FX) Fee?
An FX fee is the extra cost you pay when a purchase is billed in a different currency than your card’s billing currency. The card network (Visa, Mastercard, etc.) converts the transaction at their daily wholesale rate, and your card issuer may add an additional percentage on top.
Typical setups include:
- Network rate only: issuer passes on the card network rate with no extra FX markup.
- Network rate + issuer fee: an added 1–3% “foreign transaction fee”.
- Dynamic currency conversion (DCC): merchant or ATM converts at its own rate, often worse.
Even “no foreign transaction fee” cards still use an underlying FX rate. The difference is whether the issuer adds their own markup on top of the network’s rate.
How Currency Conversion Flows Behind the Scenes
When you tap or insert your card in another currency, the terminal sends the transaction in the local currency to the card network. The network converts the amount to your billing currency using its daily rate, then forwards the converted amount to your issuer.
The issuer may then:
- Apply a fixed FX markup (for example 2.0–2.5% on the converted amount).
- Apply an additional “foreign transaction fee” that also covers extra processing costs.
- Apply no additional FX fee at all (common on travel cards marketed as “0% FX”).
The effective cost of spending abroad is therefore:
Real cost ≈ (network FX rate difference vs. interbank) + issuer FX markup + any ATM/merchant surcharges.
Dynamic Currency Conversion (DCC) & ATM FX
Dynamic currency conversion (DCC) is when a terminal or ATM offers to charge you in your home currency instead of the local one. It sounds convenient, but the exchange rate is chosen by the merchant or their provider, not by the card network.
Typical risk points with DCC and ATMs:
- Higher markups: DCC rates can be several % worse than network rates.
- Extra ATM fees: fixed surcharges per withdrawal plus FX markup on top.
- Multiple layers: ATM fee + DCC markup + potential issuer FX fee.
Many travellers prefer to decline DCC (“charge me in local currency”) and let their card handle the conversion, especially if they use a card with 0% FX markup.
“0% FX” Cards – What to Check Carefully
Cards advertised as “no foreign transaction fee” usually waive the issuer’s FX markup, but you should still check:
- Applies to all currencies? Some cards exclude certain regions or online purchases.
- ATM withdrawals: 0% FX might not cover cash withdrawals, only card purchases.
- Other fees: higher annual fee or cash withdrawal charges can offset the FX savings.
- Rewards trade-off: some 0% FX cards offer weaker rewards compared with domestic-focused cards.
For frequent travellers, a true 0% FX markup card combined with smart use of local-currency billing can significantly reduce the cost of spending abroad.
Compare FX Features Across Cards
| Card Type | FX Markup | ATM Abroad | DCC Protection | Good For |
|---|---|---|---|---|
| Standard domestic card | Often 2–3% on all foreign purchases | Additional fixed fee + FX markup | No specific protections | Mostly domestic spend, rare trips |
| Travel & FX card | 0% FX markup on purchases in foreign currency | Sometimes limited free withdrawals/month | Education around saying “no” to DCC | Frequent travel and online foreign spend |
| Premium travel card | 0–1% FX markup, depends on issuer | Better ATM terms but higher annual fee | Guides/tools for FX & travel spend | Heavy travellers who also value lounges & insurance |
For structured comparisons of FX fees, travel perks and insurance across multiple cards, visit the Travel & FX Cards hub on Choose.Creditcard .
Explore Related Travel & FX Topics
Travels.Creditcard
Overall structure of travel-focused credit cards and fee patterns abroad.
Trip.Creditcard
How to think about FX, insurance and lounges across a full trip.
NoFee.Creditcard
Cards with no annual fee and how FX charges still show up.
TravelRewards.Creditcard
Balancing FX costs against travel rewards and points.
Cashbacks.Creditcard
When simple cashback can be better than travel points once FX fees are included.
Part of The CreditCard Collection
FX.Creditcard is one spoke in The CreditCard Collection — a network of focused minisites operated by ronarn AS. Each site explains one aspect of credit-card usage in clear language and then connects you to independent comparison tools.
We do not issue cards or handle applications. Our role is to summarise documentation, highlight trade-offs and help you understand what to look for before you compare real offers.
This page is informational only and is not financial advice. FX fees, card terms and eligibility criteria change frequently — always verify details with the card issuer before applying.
Ready to Compare Cards for FX Use?
Use FX.Creditcard to understand how currency conversion and foreign fees work — then move to the Travel & FX hub to see how different card types handle FX, ATMs and travel perks side by side.
Go to the Travel & FX Cards hub