What a foreign transaction is, and the common fee ranges
A foreign transaction occurs whenever a purchase or withdrawal is initiated in a currency other than the account’s billing currency, or when a merchant outside the country submits a transaction for processing. Industry references consistently report the same primary range for issuer surcharges: “Foreign transaction fees generally range from 1 percent to 3 percent and tend to average around 3 percent of each transaction.” Bankrate — A Guide to Foreign Transaction Fees
A second authoritative summary says, in shorter form, that foreign transaction fees are “typically 1% to 3% of the transaction value.” Investopedia — Foreign transaction fee Both statements describe the common issuer-added component; the statements do not replace or negate separate conversion markups created elsewhere in the payment chain.
The two-step architecture of a cross-border charge
A cross-border charge normally separates into two sequential operations:
- Currency conversion. The merchant’s price in the local currency is converted to the cardholder currency using either a network exchange rate (Visa or Mastercard) or an acquirer/merchant-provider rate if dynamic currency conversion (DCC) is used. Network rules and merchant guidance explain that this conversion is a necessary step in settlement and that the conversion rate may be set at authorization or settlement. Visa’s consumer guidance warns that, if a merchant offers DCC, “you may receive the option to pay in your home currency, which includes exchange rate and additional fees.” Visa — Dynamic Currency Conversion
- Surcharges. After conversion, intermediaries may add percentage or fixed surcharges: the issuer may charge a foreign-transaction fee (the common 1–3%), ATM operators may add owner surcharges, and merchant acquirers may embed markups when DCC is used. Mastercard’s DCC materials emphasize that merchant-offered conversion “includes exchange rate and additional fees,” and require disclosure to cardholders and acquirers. Mastercard — DCC Performance Guide (PDF)
Both steps are necessary to understand final cost. The same €100 purchase can produce materially different dollar outcomes depending on which conversion is used and whether any surcharges apply.
How network conversion versus DCC changes the math
When conversion is performed by Visa or Mastercard, the card network applies a published exchange rate (often a daily rate) and the issuer may then apply a foreign-transaction fee. When a merchant offers DCC, the merchant’s provider converts the amount into the cardholder’s currency and typically uses a markup; if the cardholder accepts the DCC, the issuer does not apply a post-conversion foreign-transaction fee (because the transaction is presented in the billing currency), but the consumer has already accepted the merchant’s exchange rate and implicit markup. Visa explicitly states the consumer choice: the DCC option “includes exchange rate and additional fees.” Visa — DCC guidance
Mastercard’s performance guide clarifies the flow and warns that DCC is a separate product layer with its own monitoring and required disclosures. That difference explains why two different cards charged at the same merchant can yield different final posted amounts. Mastercard — DCC guide
Precise, step-by-step numeric examples
Clear arithmetic demonstrates the effects. The following calculations are performed digit by digit.
Scenario A — Network conversion + issuer foreign-transaction fee
- Merchant bill: €100.
- Network conversion yields USD equivalent: $110.00 (example rate chosen for illustration).
- Issuer foreign-transaction fee: 3% of the converted dollar amount.
Calculation:
- Convert: €100 → $110.00.
- Fee percentage: 3% = 0.03.
- Fee = $110.00 × 0.03. Compute digit-by-digit:
- 110.00 × 0.03 = 110.00 × 3 / 100.
- 110.00 × 3 = 330.00.
- 330.00 / 100 = 3.30.
- Posted total = $110.00 + $3.30 = $113.30.
Scenario B — Merchant DCC accepted
- Merchant offers to bill in USD at a marked-up rate: USD equivalent = $118.00.
- If the card does not charge a foreign-transaction fee (because transaction is already in USD), the posted total remains $118.00.
- Net effect versus Scenario A: $118.00 − $113.30 = $4.70 higher for the cardholder, produced entirely by the merchant’s conversion markup.
Scenario C — ATM cash withdrawal under deposit terms with Chase currency adjustment
- ATM withdrawal (local currency) converts to $110.00 equivalent. Chase’s Additional Banking Services and Fees document specifies a “Foreign Exchange Rate Adjustment: 3% of withdrawal amount after conversion to U.S. dollars.” The schedule also shows a $5 non-Chase ATM fee for withdrawals made outside the U.S. Chase — Additional Banking Services and Fees (PDF)
Calculation for a €100 withdrawal that converts to $110.00:
- Foreign Exchange Adjustment = $110.00 × 0.03 = $3.30 (digit-by-digit: 110.00 × 3 = 330.00; ÷100 = 3.30).
- Non-Chase ATM fee = $5.00.
- Posted debit = $110.00 + $3.30 + $5.00 = $118.30 (before any ATM-owner surcharge).
These examples prove that conversion source, issuer surcharges and fixed ATM fees all add independently to the final amount.
How issuers — with emphasis on Chase — present and label fees
Chase publicly lists a set of credit products that advertise “No foreign transaction fees.” The Chase Sapphire Preferred product page states: “You will pay no foreign transaction fees when you use your card for purchases made outside the United States. For example, if you spend $5,000 internationally, you would avoid $150 in foreign transaction fees.” Chase Sapphire Preferred
At the same time, Chase’s deposit-account materials (Additional Banking Services and Fees) declare a Foreign Exchange Rate Adjustment and set specific ATM fees: “Foreign Exchange Rate Adjustment: … 3% of withdrawal amount after conversion to U.S. dollars” and “$5 per withdrawal at a non-Chase ATM outside the U.S.” That language is the basis for Chase ATM fees abroad and Chase currency conversion fee assessments on debit transactions and certain account types. Chase — Additional Banking Services and Fees (PDF)
Practical measures and what to watch for
To reduce total cost on international spending the evidence supports a three-part approach:
- Choose the right product. Use cards that explicitly advertise a Chase no foreign transaction fee or similar issuer pledge for purchase activity; those cards remove the typical 1–3% issuer surcharge for point-of-sale purchases. Chase publishes a consolidated no-foreign list that includes Sapphire products. Chase — No foreign transaction fee cards
- Refuse merchant DCC. When a provider asks whether to charge in the local currency or the cardholder currency, decline the cardholder-currency option. Visa warns that the DCC choice “includes exchange rate and additional fees.” Accepting the merchant’s converted price often costs more than allowing the card network to perform conversion. Visa — DCC guidance
- Manage cash carefully. Minimize the number of ATM withdrawals, use in-network ATMs where possible, and consider premium checking products or fintech solutions that reimburse ATM surcharges or use tighter exchange margins. Chase’s deposit documents list the exact language and amounts that apply to non-Chase ATM use and the 3% Foreign Exchange Rate Adjustment. Chase — Total Checking guide (PDF)
How to calculate your expected incremental cost before travel
A short formula helps estimate incremental fees for planning:
- Estimate local-currency spend → convert via an approximate market rate to USD → add expected issuer percentage (1%–3%) if the card charges it → add fixed ATM fees per withdrawal multiplied by expected number of withdrawals → add any probable ATM-owner surcharges.
Example planning calculation for $2,000 of foreign purchases on a card with a 3% foreign-transaction fee:
- Issuer surcharge = $2,000 × 0.03 = $60.00 (digit-by-digit: 2000 × 3 = 6000; ÷100 = 60.00). That $60 is the predictable incremental cost the issuer would apply; if the card has Chase no foreign transaction fee, that $60 would not be charged. Chase uses an illustration of $5,000 international spend to show avoided fees ($5,000 × 0.03 = $150 avoided) on its Sapphire page. Chase Sapphire Preferred
Final Considerations
The arithmetic of cross-border spending separates conversion from surcharge. Card networks perform conversion; issuers and merchants add surcharges and fixed fees. The combination of network exchange-rate application, merchant DCC markups, issuer foreign-transaction percentages, and ATM fixed fees determines whether a consumer pays only the market exchange spread or a materially higher amount. Chase’s public materials illustrate both sides: Chase travel cards that state “No foreign transaction fees” for purchases, and deposit-account PDFs that impose a 3% Foreign Exchange Rate Adjustment for non-USD debit or ATM activity. Consumers who prepare — by selecting fee-free travel credit cards for purchases, refusing DCC at point of sale, and consolidating ATM withdrawals — can materially lower the aggregate cost of Chase card overseas charges and other international purchase fees. Chase Sapphire Preferred, Chase Additional Banking Services and Fees (PDF), Visa — DCC
Primary sources and guides cited: Chase product and deposit PDFs (Chase Sapphire Preferred page and Chase Additional Banking Services and Fees); Visa consumer guidance on dynamic currency conversion; Mastercard DCC Performance Guide; Bankrate and Investopedia summaries of typical fee ranges. Chase Sapphire Preferred, Chase Additional Banking Services and Fees (PDF), Chase Total Checking guide (PDF), Visa — Dynamic Currency Conversion, Mastercard — DCC guide (PDF), Bankrate, Investopedia, The Points Guy, Wise