Avoiding Foreign Transaction Fees

The goal of this guide is to explain how the British Curve card (available to most expats in Europe, soon also available in the US) can be used to avoid Foreign Transaction Fees of many (not all!) American credit cards. In particular, this includes attractive rewards cards, such as Chase Freedom Flex and Citi Custom Cash, which give up to 7.5% rebate on groceries and other product categories.

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Introduction

American banks offer some of the most generous reward credit cards on the market. This includes cards offering sometimes up to 5% in cashback or rewards points, which sometimes lead to an effective rebate of up to 7.5% or even more when converted into airline miles (and used correctly). Two of the most attractive types of rewards points are Chase Ultimate points and Citi ThankYou Points.

Unfortunately, many high rewards credit cards can typically only used within the US, because these cards often charge a Foreign Transaction Fee of 3% when used abroad. Together with the currency conversion cost (typically 0.3-0.5%), this often completely eradicates the bonus.

Avoiding Foreign Transaction Fees: The Curve card

The concept of the European Curve Card* (5 GBP bonus) / Waitlist for US Curve Card* is simple: All credit cards that you own combined in a single card! Whenever you use your Curve card, the charge (and merchant code!) just gets passed through to one of your regular credit cards. You can always choose the respective card in the app and even decide if Curve should exchange currency for you or rather charge the original currency. Moreover, you can even "go back in time" and decide after a few days that another card should be charged (to optimize cashback etc.). Note that Curve only works with Visa and Mastercard, but those will be the typical cards accepted outside of the US anyway.

For most expats the free version Curve Blue is completely sufficient, which provides above features and allows you to exchange up to 500 EUR in credit card purchases per month without additional fees / markups (note that there is always some markup when using currency conversion on the weekend due to markets being closed).

Most importantly, it can be linked to Chase and Citi cards and thus avoids Foreign Transaction Fees when high premium rewards cards, such as Chase Freedom card lineup* (200 USD bonus, no annual fee) or Citi Custom Cash (200 USD bonus, no annual fee) are used (both with 5% rebate and more).

Why should you own a Curve card and how should you use it?

  • Saving Foreign Transaction Fees. Many non-travel credit cards charge a Foreign Transaction Fee of 1-4% for using your credit card in a different currency. If you link your card with Curve and select USD as the card's currency, Curve will convert any charge into USD and there will often not be any Foreign Transaction Fee (applies to Chase cards and some other issuers). Converting an amount equal to 500 EUR per month is free (for the free Curve Blue card), while there is a charge of 2% on converting larger amounts. While this should be avoided, it is still cheaper than most Foreign Transaction Fees. Let us note that there are card issuers that even charge a Foreign Transaction Fee if the card is charged in USD, but from a foreign merchant. In this case, the Curve Card may not help you to avoid the Foreign Transaction Fee. We tested it for credit cards from Chase and Citi (see above).

  • Saving Optional Payment Fee in Europe. While European laws highly restrict additional fees for the use of credit or debit cards, there are two exceptions: Companies are allowed to charge additional fees for business credit cards and for non-European cards. This means that some merchants (such as Lufthansa) charge an additional fee if you use a foreign card. You can avoid this by linking the respective card through Curve, as this is a European card, so merchants cannot charge an additional fee. If you use a US card without Foreign Transaction Fee (such as Chase Sapphire Reserve) make sure that you change the card's currency in the Curve App to the currency you will be charged in, so that there is no currency conversion.

  • Not needing to carry several cards. Curve gives access to all Visa and Mastercards that you have. You can keep them save at home and choose in the Curve app, which one you want to use. As long as you do not want to change your selection, you do not need to carry your smartphone with you. Even better: If you applied for a new card sent to a US address, while you are abroad, you can use the card immediately if somebody sends you a picture with the card details (so you can link it in the app).

In summary, the Curve Card is free and a useful tool for expats that can be used in combination with any other Visa or Mastercard.

Additional remarks

You should be aware of the following details:

  • Chargebacks. If there is an unjustified charge, you can go through both Curve and your actual credit that was actually charged. In most cases, it should be easy to get your money back when you have proof that the charge was unjustified. However, things may get messy if Curve and your other card issuer disagree, which may lead to some hassle.

  • Always choose the appropriate card currency. When you add a new card to Curve, it will usually automatically recognize what its base currency is (like USD for all US cards). If you this card has a Foreign Transaction Fee, this is the correct setting. If it does not and you want to use Curve only to avoid an Optional Payment Fee or to use the card (without carrying the other card), you should change the currency to whatever currency you pay in (e.g., EUR if you are paying in the eurozone). The app will show a message that this is different from the recognized based currency, but it will work and Curve will not do any currency conversion, but it will just pass the charge through (and your card provider will convert with markup of maximally 0.3-0.5% if there is no Foreign Transaction Fee). Make sure that you update this information. If you had the setting on EUR and then you travel to Denmark and charge in DKK, Curve will first convert your charge from DKK to EUR and then your card issuer will convert EUR to USD potentially leading to some small additional fees (not a huge deal, but better avoid this).

  • Keep below the free limit. If you have the free Curve Blue card, you can convert up to 500 EUR (or equivalent currency) for free per month, so you get pretty much the current market rate without additional fees. However, once you go above this limit, Curve Blue will charge a fee 2%, which makes it less attractive for larger purchases. This limit can be increased to 15,000 EUR per year if you pay for a Curve Black card, but this does not seem to be the best option. Note that your partner may be able to also get a Curve card to double the free limit to 1,000 EUR per month.

  • Avoid using the Curve card on weekends (for currency conversion). During the weekends most currency exchanges are closed, so the exchange rates of the Curve card are based on the previous week. However, as there can be larger currency fluctuations when markets open on Monday, Curve protects itself against this by charging a fee of 0.5% (if the currencies involved are only USD, GBP or EUR) or 1.5% (if any other currency is involved). You can read more here. There is no such fee if you only use Curve as an intermediary without exchanging currency (e.g., when you use Curve with card that does not have a Foreign Transaction Fee). A fee of 0.5-1.5% is still much lower than Foreign Transaction Fee of 3% or more, but it is easy to avoid this fee by just making your purchase during the week.

  • Going back in time. This function is super useful if you just realized that the wrong card was charged, when there would have been a better option (e.g., much larger cashback). Note, however, that you there are limitations on the currencies, so you cannot always change the card to a different card, if this other card has a different currency than your original choice. See this page for more details.

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