Spending money on a well-deserved vacation is one of our most fulfilling aspirations. On an international trip, many would justifiably point out it’s worth it to spend your hard-earned-saved money. While Covid-19 will hold our travel plans for a while longer,  there’s no changing that most tourist destinations will remain cashless markets. And what’s not to love about that? We can quickly and conveniently splurge on airfares, hotel stops, shopping sprees, fine dining, and more.

While it’s certainly easier to use a credit card while spending money abroad. However, credit card spending overseas will undoubtedly shock you unless you are well-versed about Foreign Transaction Fees – that these transaction charges are around 3%.

Shopping can cost you an overseas charge:

In fact, online purchases from foreign websites can cost you a credit card overseas charge, even if you are within India. Buying from kiosks and duty-free shops, mainly linked to overseas accounts, is also how you could be charged fees. Let’s understand them better.

Types of surcharges 

While on a trip, you are bound to keep track of your purchases and exchange rates not to overspend your budget. Any form of transaction made abroad has an overseas fee applied to it. It’s only after you return home from the trip that you frown upon the charges you owe to the bank that significantly shot up by 5 to 6%. To better understand this ‘increased due,’ also known as Credit Card overseas charges, one needs to be aware of the following types of surcharges:

Cash Withdrawal Fee 

When abroad, if you have used an ATM, it will charge you for cash withdrawal irrespective of the amount you have withdrawn. On every transaction, a 2.5% to 3.5% fee can be applied. Almost all banks charge this fee on withdrawal. Indian credit cards already charge cash withdrawal fees within the country, so it is naturally costlier abroad. 1 to 4% additional charges will be applied to a standard fee per transaction. 

Conversion Fee 

If you hold a credit card in an Indian bank, you need to be mindful of two things. First, the balance you have on your card will be in INR, and second, a conversion rate will be applied after you carry out your transaction from the Indian rupee to the country’s currency where you are visiting. This conversion fee is 1 to 2% for MasterCard and Visa.

Currency convergence rates can also differ based on the date of transaction and the date of settlement. The merchant sets an amount of settlement between the bank and credit card owner before the settlement date. Hence, the rate decided on the settlement date will be different compared to the actual transaction date.

Types of transactions through bank’s perspective 

You can conduct primarily two types of transactions based on a bank’s perspective. You either pay in US dollars or in the currency of the country you’ve visited. When performing transactions directly in USD, the Indian rupee is converted into the US dollar, on whichever overseas charges are applied. On the other hand, if transactions are performed in another country’s currency, your rupee will first be converted to USD and then to the following country’s currency. The banks will add overseas charges to it as well. That is just how the conversion rate works all over the world.

Many Indian banks have begun adopting western ideas such as 0% transaction fees credit cards. Premium customers benefit from utilizing such cards and accomplish transactions without additional costs; ain’t that great?

It is advisable to visit your credit card websites to find out about foreign transaction fees per card. Since these charges keep on changing, one should make a point of checking them before traveling. Even while choosing a credit card from any bank, one should check for the lowest transaction fees applicable to it.


Financial charges are also applicable to foreign transactions when you fail to pay the due on your credit card on time. This rate would be between 23 to 42%, so be wary about paying your dues.

Final Takeaway

If you want, you can avoid Credit Card overseas charges/ Foreign transaction fees altogether by exchanging currency before traveling. Even by avoiding using ATMs in foreign countries, you can save money. But then you hit a moot point of not going cashless during your voyage. It also consists of confusing conversion rates or possible theft. 

By now, you must be well aware of which credit card will suit you the best. So choose your credit card wisely and enjoy your travel! For more financial insights, head over to your favorite neobank – Salt’s blog