What are foreign transaction fees typically charged for

Subject : Business

Question: What are foreign transaction fees typically charged for?

A) Using a credit card for purchases outside of your home country

B) Transferring funds between two accounts within the same bank

C) Making payments through an online payment gateway

D) Accessing your account information through an ATM

Expert Verified Solution:

The correct answer is:

A) Using a credit card for purchases outside of your home country.

Explanation:

Foreign transaction fees are typically charged when you use your credit card (or sometimes debit card) for purchases made outside of your home country. These fees are applied by the card issuer to cover the costs associated with converting the transaction from a foreign currency to your home currency, and they are usually a percentage of the transaction amount (commonly between 1% to 3%).

In contrast:

B) Transferring funds between two accounts within the same bank usually does not incur foreign transaction fees, although it may have other fees depending on the bank’s policies.

C) Making payments through an online payment gateway is not typically associated with foreign transaction fees, but rather processing fees from the payment gateway service.

D) Accessing your account information through an ATM might incur ATM fees or foreign ATM fees, but these are separate from foreign transaction fees.