Understanding Foreign Transaction Fees on International Purchases

Question:

What is a common reason for banks to charge foreign transaction fees on international purchases?

A) To increase customer rewards points

B) To cover the costs of currency conversion

C) To promote domestic spending

D) To encourage the use of credit cards abroad

Answer:

B) To cover the costs of currency conversion

Explanation: Banks charge foreign transaction fees to cover the costs associated with converting currencies and processing international transactions. This fee helps offset the expenses incurred when handling transactions in foreign currencies.