Travel
How Families Could Save Hundreds on Their Overseas Summer Vacation with the Right Travel Credit Card — No Annual Fee Necessary
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
Terms apply to American Express benefits and offers. Visit americanexpress.com to learn more. Citi is an advertising partner.
Experts expect 2023 to be a big year for international travel. And if you're one of the millions of Americans heading overseas this summer, you could potentially save hundreds of dollars on your trip by using the right credit card.
We looked at 84 credit cards from 18 issuers, finding many opportunities for travelers to shrink the cost of their overseas vacation. Whether you're taking advantage of sign-up bonuses, using cards with no foreign transaction fees or leveraging other perks, your choice of credit card can make a real difference. That's a big deal, because it's no secret international travel can be incredibly expensive.
The problem is that most people rarely change credit cards. Sure, some people regularly apply for new cards, chasing sign-up bonuses and great rewards returns, but that's hardly the norm. Most people tend to lean on the same card (or maybe two cards) they've used for years no matter the situation. It's easy to understand why — most of us have miles-long to-do lists and don't want to spend significant time chasing rewards — but that inertia can cost you real money.
Keep reading to learn more about how you can change that before you and your family jet off for your international vacation this summer.
On this page
- Key findings
- International travel is red hot, and the right travel card can help you do it more cheaply
- Foreign transaction fees have nearly vanished from travel cards
- Travel credit cards don't have to mean high annual fees
- Significant sign-up bonuses widely available on no-annual-fee travel cards
- No-annual-fee travel cards' other perks shouldn't be overlooked
- The bottom line: The right travel card can save you real money on your overseas trip
- Methodology
Key findings
- Paying for your international trip with a travel credit card instead of your favorite cash back card this summer can save you hundreds of dollars — and you don't need to pay an annual fee to reap the benefits. It's easy to keep using your favorite card when you head overseas. However, by seeking the right travel card instead — one that doesn't have foreign transaction fees or annual fees, but offers sign-up bonuses, in-flight purchase discounts and other perks — you can potentially save a lot of money on that trip that you might not have with the typical cash back card.
- Foreign transaction fees have nearly vanished from travel cards, but many others still have them. Just 4 of 84 travel credit cards charge foreign transaction fees, all of which have a fee of 3% of the purchase amount. However, a check of many of the most popular cash back credit cards from the nation's biggest issuers shows many of those cards come with foreign transaction fees, meaning using them can add another 3% onto an already expensive travel bill.
- 1 in 3 travel cards have no annual fee, and another 10% waive the fee for the first year. While most travel cards still come with an annual fee (the median fee among those that have one is $99 and the average is $209, though seven had fees of $499 or higher), there are still many options available for those who don't want to pay an annual fee.
- Big sign-up bonuses can be found on travel cards with no annual fee and no foreign transaction fee. 22 travel cards came with no annual fee and no foreign transaction fee and offered a sign-up bonus. The average sign-up bonus was about 27,000 points or miles — however, three of those cards offered bonuses of 60,000 or more points or miles, including two of at least 100,000. (NOTE: Seven other cards offered sign-up bonuses, charged no foreign transaction fees and waived the annual fee for the first year. The average bonus for those cards was about 47,000 points or miles.)
- In-flight purchase discounts and TSA PreCheck/Global Entry credits are among the other perks on no-annual-fee, no-foreign-transaction-fee cards. While these perks aren't going to change your life, international travel is already expensive enough, so every bit of savings can help. If you're willing to pay an annual fee after the first year, perks like priority boarding and free checked bags become more of a possibility.
International travel is red hot, and the right travel card can help you do it more cheaply
After cratering in the darkest days of the coronavirus pandemic, interest in jetting overseas has returned in a big way, experts say.
According to a December 2022 report from travel site Hopper, nearly 2 in 3 searches (62%) made for 2023 flights were for international destinations — up from 55% at the same time the year before. The report also showed that 37% of travelers expect to spend more on travel in 2023 than in 2022, while just 19% expect to spend less. This means that millions of Americans will head overseas this summer — and spend big when they do.
One of the best ways to control costs when traveling is to shop around. That's true whether you're talking about airfares, hotels, suitcases, noise-canceling headphones or walking shoes, and it's also true when you're talking about credit cards. It may not be the first thing people think of when it comes to travel costs, but the right card can make a big difference.
As we found in our report, there's a variety of options travelers can choose from. It can be daunting to sort through them all, but focusing on a few key elements — foreign transaction fees, annual fees and sign-up bonuses — can help you narrow your choices.
Foreign transaction fees have nearly vanished from travel cards
Not long ago, foreign transaction fees — surcharges for purchases made while overseas or online in a foreign currency — were common among travel credit cards. The good news is that those days are gone.
Foreign transaction fees at a glance
- Just four of 84 — or 5% — reviewed travel cards had them
- All four cards came with a foreign transaction fee of 3% of the purchase price
- If you spend $5,000 overseas on a card with a 3% foreign transaction fee, that's an extra $150 — enough for a hotel night
- Many non-travel credit cards — including many of the most popular cash back cards — feature a foreign transaction fee, typically 3%
Among the 84 travel credit cards reviewed, just 5% of them came with a foreign transaction fee. That's a big win for travelers. That extra 3% fee may not seem like much, but given how expensive foreign travel can be, it can add up — especially if you go overseas regularly. A family of four on a European vacation could certainly drop $100 or more on nothing but foreign transaction fees.
Do know, however, that just because these fees are no longer common in travel credit cards doesn't mean they've also disappeared from other types of cards. Many of the nation's most popular cash back cards still have them — that means that if you use your beloved cash back card while in Europe, Asia or elsewhere, you'll likely pay extra to do so. You'll even pay extra for purchases made from the U.S. in a foreign currency, such as when you buy a jersey from an Argentinian soccer team, a bottle of wine from an Italian winery or a book about your favorite K-pop band from a South Korean website.
Travel credit cards don't have to mean high annual fees
Want a travel card but don't want to pay an annual fee? There are plenty of cards for you, our report found. Yes, the biggest sign-up bonuses and sexiest perks will be reserved for those willing to pony up for a big annual fee, but even "]no-annual-fee travel cards can make a difference in your travel costs.
Travel card annual fees at a glance
- 28 of 84 reviewed travel cards (33%) had no annual fee. Another eight cards (10%) waived the fee for the first year.
- The median fee, among those that always have an annual fee, was $99. The average was $209.
- 19 cards had triple-digit fees, with seven cards of at least $499. (No card with a triple-digit fee waived that fee the first year.)
- 22 travel credit cards had no annual fee and no foreign transaction fee. Seven other cards had no foreign transaction fee and waived the annual fee for the first year.
The no-annual-fee cards aren't always bare-bones offerings, either — they often come with sign-up bonuses and other perks.
Significant sign-up bonuses widely available on no-annual-fee travel cards
Don't get it twisted: In the world of travel cards, you tend to get what you pay for. The biggest sign-up bonuses, the highest status levels, the latest checkout times, the best lounge access and further swanky perks tend to be reserved for those willing to fork over hundreds of dollars in annual fees. Still, that doesn't mean that no-annual-fee credit cards mean no big bonuses.
No-annual-fee travel card sign-up bonuses at a glance
- 29 reviewed travel cards offered a sign-up bonus while charging no foreign transaction fee and no annual fee, including those that only waive it for the first year.
- 28 of the 29 offered points or miles as a bonus, while one offered cash.
- The average bonus offered on those 28 cards was about 33,000; the median was 25,000.
- Two of those 28 cards offered bonuses of 100,000 points or more; both of these cards charged no annual fee.
- Eight of those cards offered bonuses of 50,000 points or more; three of them charged no annual fee, while five waived it for the first year.
Points and miles redemption values can vary greatly. However, depending on your circumstances, many of these sign-up bonuses will be more than enough for a free hotel stay or airfare. That's a huge deal, and can potentially save you $100 or more on your trip.
No-annual-fee travel cards' other perks shouldn't be overlooked
Myriad costs go into international travel. Being able to avoid big costs like foreign transaction fees and a night or two of hotel stays by choosing the right credit card can make a major difference, but other perks can help cardholders whittle away at travel costs.
Again, you'll get more significant perks if you opt for an annual-fee credit card — but even if you don't, savings still exist.
Other perks found on no-annual-fee, no-foreign-transaction-fee cards at a glance
- In-flight purchase discounts — ranging from 20% to 50% – were among the most common perks found on these cards.
- Other perks included rental car insurance, trip insurance and credits for joining TSA PreCheck or Global Entry.
- For cards that only waived the annual fee for the first year, perks included free checked bags, priority boarding and cellphone protection.
While savings on in-flight purchases won't make a huge difference in your travel budget, every little bit helps. In contrast, a credit for a Global Entry application, which costs $100, is a bigger deal. It won't just save you money, but it can make things a little quicker and smoother when you arrive home.
The bottom line: The right travel card can save you real money on your overseas trip
International travel can be really expensive — and like most things in our lives, it's only getting more so by the day, it seems. However, shopping around to find the right credit card to take with you on your trip can have a real impact on your travel costs.
The biggest takeaway from this report should be that you don't have to pay an annual fee to get real value from your travel card for your overseas trip. Just avoiding foreign transaction fees, getting a free hotel night, being reimbursed for Global Entry and saving on in-flight purchases can add up. And again, you can find cards that allow you to do all that without paying a cent in annual fees.
Of course, travel credit card offers can vary widely, so it's important to understand all the pertinent details of the card before applying. The last thing you want to do is get starstruck by a high sign-up bonus, but end up with a card with a too-high interest rate or one that doesn't fit your spending habits and lifestyle.
It's also important to understand you shouldn't always automatically avoid all annual-fee credit cards. Depending on how you use those cards, the return they can provide can go well beyond the amount of the fee. It's up to you to do your homework to figure out if that's the case for you.
Methodology
ValuePenguin reviewed offers for 84 credit cards that offered extra rewards for travel spending. Cards from 18 issuers — including banks and credit unions — were included. We reviewed basic terms and conditions, including APRs, annual fees and sign-up bonuses, and evaluated the cards' rewards programs. All offers were reviewed online on financial institutions' public websites. Credit card offer data is accurate as of April 3, 2023.