Guide to Credit Card Overseas Charges and Transaction Fees

Credit cards continue to be one of the most popular ways to pay when in another country, due to a combination of attractive rewards, safety and convenience. But what’s not so great about using your credit card in a foreign currency are the various fees and charges involved. 

While foreign transaction fees alone aren’t likely to blow up your bank account, they can still add up to a pretty sum. Read this guide to understand how much more you are really paying when tapping your credit card while on holiday. 

When you pay with your credit card overseas, a lot happens behind the scenes. Let’s say you pay for a restaurant meal in Japan, which would be charged in Japanese Yen. 

The JPY amount charged to your credit card is first converted to USD, then converted to SGD; this is the final amount that gets charged to your credit card balance. 

Each time currencies are converted, a spread is involved. This could be a government-mandated rate, or wholesale interbank exchange rates. For processing your transaction, both the card association (Visa, Mastercard, American Express, etc.) and the bank charge a fee. 

There are also other instances where you might encounter overseas charges. One scenario is when you opt to pay in SGD while overseas through a service known as Dynamic Currency Conversion – which is not a free service.

Another scenario is when you find yourself urgently needing cash halfway through your holiday, prompting you to take a cash advance fee. Once again, doing this will incur credit card overseas fees. 

And that’s not the end of the story. There are many other credit card overseas charges and foreign transaction fees that you may encounter.

Fee	Rate
Credit card foreign exchange rate	Rate determined by respective card associations
Foreign currency transaction fee	3.25% to 3.5% (Card association: 1% Bank admin fee: 2.25% to 2.5%)
Currency conversion fee for SGD transactions processed outside of Singapore	1% to 2.8%
Dynamic currency conversion (DCC)	Rate determined by DCC providers
Cash advance fee	8% of amount withdrawn, or S$15, whichever is higher

As you can see, there are several fees and charges that you can incur on foreign currency transactions. We’ll discuss each one in the following sections. 

As mentioned earlier, foreign currency transactions are first converted to USD then to SGD. These conversions are carried out at forex rates determined by the respective card associations, which are not disclosed to the cardholder. 

Also, the forex rate used will depend on the day the conversion is processed, which may not be on the same day as when you made the purchase. A markup may be included on top of the mid-market exchange rate. 

Both your bank and the card association charge a fee for processing foreign currency transactions. This is on top of the credit card foreign exchange markup.

Typically, card associations charge 1% of the value of the transaction. Meanwhile banks charge up to 2.5% – this means foreign currency transaction fees can range from 2.25% to 2.5%. In many cases, this is the largest fee associated with overseas transactions. 

If your credit card transaction is charged in SGD but processed overseas, you will not incur the foreign currency transaction fee. Instead, you will be charged a currency conversion fee. 

This fee varies widely, from 1% to 2.8%, depending on your bank. Currency conversion fees apply even on online transactions, so before you click that Check Out button, you may want to check where the e-commerce store or platform is based. 

When you’re shopping overseas (or online), you may be offered the option to pay in SGD instead of the local currency such as JPY or TWD or THB. 

This is a service known as DCC, and is touted as a convenient service for travellers who want to know exactly how much they are spending. However, DCC should always be avoided because it is notorious for charging a high markup. 

The forex rate used is determined and paid to the DCC providers, which are not your card associations. This means that in addition to DCC, you will be charged the currency conversion fee (see above) – an extra 1% to 2.8%.

A cash advance allows you to withdraw part of your credit limit in cash from a compatible ATM. This can be a lifesaver in a pinch, such as when you find yourself in need of cash while overseas. 

The catch is cash advance fees are costly, typically at 8% of the amount withdrawn, or S$15, whichever is higher. Also, the cash withdrawn must be repaid to your credit card account in the upcoming statement, with any shortfall subject to credit card interest charges.

The most significant way you can minimise credit card overseas charges is to say no to DCC, every single time. You can do so simply by choosing to pay in the local currency, and never in SGD. 

Doing this will allow you to avoid unfavourable forex rates charged by the DCC operators, and the additional currency conversion fee of 1% to 2.8%.

Cash advances come with costly fees, and are best reserved for emergencies. Better yet, should bring a debit card or ATM card along on your trip, and use it to withdraw cash when necessary. 

The overseas ATM usage fee will be much lower than your cash advance fee. And since you are drawing from your bank account, you won’t have to deal with any credit card interest charges. 

If you’re really determined not to pay any foreign currency transaction fees or credit card overseas charges, one solution is to use cards that do not have such charges.

For instance, the Trust Card does not charge foreign currency transaction fees, and only the prevailing Visa rate is applied on your transaction. The drawback is you won’t earn any rewards points or air miles which come with other popular travel cards. 

Another way to minimise your foreign transaction fees is to pair your credit card with the Instarem Amaze card. Only Mastercard credit cards are accepted, but you’ll be able to enjoy a lower fee when making overseas purchases. 

Card	Cash rebate/miles earn rate	Details
Citi Rewards Card	10X ThankYou Points (4 mpd) on shopping, online shopping, online food delivery, online groceries, Grab and Gojek rides	- S$1,000 spend cap per statement month - Travel transactions excluded - S$196.60 annual fee (first year waived) - No minimum monthly spend
Maybank Family & Friends Card	8% monthly cashback on 5 chosen categories per quarter (capped at S$25 each category, up to S$125 per month) Categories include: - Groceries  - Dining & food delivery  - Transport  - Data communication & online TV streaming - Retail & pets  - Online fashion  - Entertainment - Pharmacy - Beauty & wellness - Sports and sports apparels  - Malaysian Ringgit Spend (automatically included on top of your 5 preferred categories)	- Minimum S$800 monthly spend, otherwise 0.3% cashback - S$181.67 annual fee (first three years waived)
UOB Lady’s Solitaire Card	10X UNI$ per S$5 spend (4 mpd) on 2 chosen categories: - Beauty & Wellness - Fashion - Dining - Family - Travel - Transport (excluding public transport via amaze) - Entertainment 1X UNI$ (2 miles) on all other spend	- S$2,000 spend cap (per calendar month) - UNI$ are calculated in S$5 blocks and rounded down to the nearest whole number - S$414.20 annual fee (first year waived) - S$120,000 annual income required - No minimum monthly spend
UOB Lady’s Card	10X UNI$ per S$5 spend (4 mpd) on 1 chosen category: - Beauty & Wellness - Fashion - Dining - Family - Travel - Transport (excluding public transport via amaze) - Entertainment   1X UNI$ (2 miles) on all other spend	- S$1,000 spend cap (per calendar month)   - UNI$ are calculated in S$5 blocks and rounded down to nearest whole number - S$196.20 annual fee (first year waived)   - No minimum monthly spend
UOB KrisFlyer Card	3 mpd on Singapore Airlines, Scoot, KrisShop, Kris+ purchases, dining, online food delivery, online shopping, online travel, and transport spend (excluding public transport via amaze) 1.2 mpd on all other eligible spend	- Minimum S$800 annual spend must consist of SIA, Scoot, and KrisShop transactions - Bonus miles are only credited to KrisFlyer membership account two months after card membership year - S$196.20 annual fee (first year waived) - No minimum monthly spend - No transfer fees for KrisFlyer miles
OCBC Rewards Card	15 OCBC$ (6 mpd) per S$1 spent on on selected retailers per quarter [New!] From 1 April to 30 June 2024, OCBC Rewards Cardholders will earn 6 mpd at Watsons, department stores or duty-free shops. 10 OCBC$ per S$1 spent (4 mpd) on clothes, bags, shoes, and other shopping transactions	- 10,000 OCBC$ cap on bonus spend (S$1,110) per month, capped at 120,000 bonus OCBC$ (or about S$12,000 spent on shopping) annually - Additional 5,000 OCBC$ cap per month on selected retailers - OCBC$ awarded per S$5 blocks - S$196.20 annual fee (first two years waived)
Citi PremierMiles Card	2 mpd on foreign spend and 1.2 mpd on local spend	- Miles never expire - 2 free airport lounge passes per year via Priority Pass - S$196.20 annual fee (first year waived) - No monthly minimum spend
HSBC TravelOne Card	2.4 mpd on foreign currency spend, 1.2 mpd on local spend	- No conversion fee for air miles or hotel points (until 31 Dec 2023) - 4 complimentary airport lounge access via Dragon Pass for primary cardholders - S$196.20 annual fee (first year waived) - No monthly minimum spend
Citi Cash Back Card	- 8% cashback on groceries and petrol - 6% cashback on dining - 0.25% cashback on all other retail spend	- Cashback capped at S$80 per month - S$800 minimum monthly spend - S$196.20 annual fee (first year waived)
Citi Cash Back+ Card	- Unlimited 1.6% cashback on all eligible spend	- No cashback cap - S$196.20 annual fee (first year waived)

Travel credit cards offer more miles per dollar for overseas transactions, with no minimum spend or monthly caps. Such cards can help you offset the cost of overseas charges by “clawing back” some value in the form of higher air miles. 

Bear in mind that the more you use your credit card overseas, the more foreign transaction fees you will rack up. Hence, this method may work best with limited credit card use.