Credit Card Foreign Transaction Fee: How the Mark-Up is Calculated

A line of flexible, short-term borrowing, credit cards assist with tracking expenses, simplify payments and offer valuable benefits from banks and lenders, besides helping build your credit score. They are also among the personal finance tools with the highest interest rates and have a slew of additional charges and fees attached.

Credit card charges and fees include joining fee, annual fee, cash advance fee, overlimit charges, late payment charges, reward redemption fee, foreign currency mark-up fee and transaction charges, lounge access and concierge charges. For first-time users, it is especially important to do adequate research and compare various cards available to check for which is best suited for your needs.

It is advisable to make a choice carefully rather than picking the first name you see. Compare at least three or four cards for factors such as annual fees, interest rates and rewards and perks. You must also take into account the other fine print before making a final choice. Ensure you grasp this information prior to applying for the card.

A foreign transaction fee is applied on credit cards when you conduct retail transactions outside of India, complete online transactions in a foreign currency, make ATM cash withdrawals overseas, or make a transaction in India where the point-of-service (POS) machine is linked to an overseas account (e.g. duty-free shops). Any other transaction made in foreign currency also attracts the fee.

Credit cards allowed for use in foreign countries are subject to extra fees known as the foreign currency mark-up fee. While this fee differs from card to card and among lenders, it usually ranges between 1-3% of the transaction amount.