The Fees You Never See on a Statement

By Neil Solomon · 3 min read

Picture a couple named Nadia and Joe in their fifth month abroad. They spend about $3,000 a month by card, and one evening Joe, who has never read the small print on anything, reads the small print on a statement.

A grocery bill of $97 shows up as $99.91. The extra $2.91 has a name: foreign transaction fee. It is 3 percent.

He starts a list. Within an hour he finds three places where money leaves without anyone sending a bill.

Where Nadia and Joe’s money leaks in a year (an illustration)

Cash machines charge twice. The machine’s owner takes a fee, and the home bank takes another, and an exchange rate with a margin sits on top. The card reader at a restaurant asks a question that sounds like a kindness: pay in dollars or in the local currency? Paying in dollars lets the restaurant’s bank choose the exchange rate, and that rate can carry a markup of several percent.

$1,634 a year, from three lines nobody ever billed them for.

Nadia and Joe make four changes. They move everyday spending to a card with no foreign transaction fee. They always choose the local currency at a terminal. They take cash out once a month, in a larger amount, from a machine that belongs to a bank. And Nadia calls their home bank and asks whether it refunds machine fees abroad, because some banks do. Their yearly cost falls to about $110.

You might say these are small amounts. Each one is. A 3 percent fee is $2.91 on a grocery run. It is the repetition that adds up, and a household that lives abroad spends in the same foreign currency for years.

Nobody in this is a villain. Each fee pays for something: the card network, the machine, the exchange of one currency for another. Some banks charge it and others choose not to. The difference between one card and another is often one line in the terms.

Many banks and card companies charge nothing for spending abroad, and many charge a lot. I am not listing any, because terms change and what suits one household may not suit another. The questions stay the same.

You could ask your bank or card company three questions. What is your foreign transaction fee? Do you charge or refund cash machine fees abroad? Does the card let me pay in the local currency at a terminal? You could also read last month’s statement for any line with the word foreign or conversion in it.

In our calculator, we charge 3 percent each time dollars are changed into local money. It is the same kind of cost, and the figures above show how much it can matter.

What was the last fee you found on a statement that you had never noticed? Tell us in the comments. Someone reading may be about to open theirs.