Using rewards-earning credit cards for overseas purchases can incur foreign transaction fees which cost more than the value of any rewards you earn on your purchases. To avoid these fees, it's best to use either cash, or a card that doesn't charge such foreign transaction fees. Today we'll take a look at a few such cards.
American Express Bluebird
The Bluebird, which is technically a prepaid debit card, charges no foreign transaction fees on foreign purchases or foreign ATM transactions. To earn rewards on your overseas purchases made with the Bluebird, you can load the card with Vanilla Reload cards purchased in the US, for example at drugs stores like CVS; you can load the card at Walmart using a rewards-earning debit card; or you can simply transfer in money from a linked US bank account. However you choose to load the Bluebird, you won't pay foreign transactions fees when you use it overseas for purchases or ATM withdrawals. You can also order a Bluebird card without any impact on your credit report, since it's a prepaid debit card, not a credit card.
Since 2008, when Discover acquired the Diners Club overseas credit card network, Discover cards have had increasingly wide acceptance internationally, and all Discover cards have no foreign transaction fees. I recommend the Discover it card (formerly known as Discover More) since it has no annual fee and potentially lucrative rotating 5% cash back categories. For example, in the last quarter of 2012, Discover gave 5% cash back on all "online purchases," a very broad category!
Like Discover, all Capital One cards have no foreign transaction fees. These cards include the Capital One Venture Rewards card, which allows you to redeem your points for travel expenses.
Chase Sapphire Preferred and Chase Ink Bold/Plus
These premium credit cards, which earn flexible Ultimate Rewards points, incur no foreign transactions fees on purchases made outside the United States. The Sapphire Preferred has a $95 annual fee after the first year, as do the Ink Bold and Ink Plus cards.
American Express Platinum
While this card with its $450 annual fee certainly isn't worth getting just to avoid foreign transaction fees, if you already have a Platinum card you can use it overseas and earn Membership Rewards points without incurring any additional fees.
Co-branded Credit Cards
If you're interested in earning points with a specific rewards program, the following cards also have no foreign transaction fees:
- British Airways Credit Card
- Marriott Rewards Premier Visa Signature
- Hyatt Credit Card
- IHG Rewards Club Select Visa
- United MileagePlus Club Card
- Fairmont Visa Signature