Elon Finance Professor Featured in WalletHub Article on Travel Credit Cards

Elon University Assistant Professor of Finance Andrew Schwartz recently cautioned travelers that credit cards marketed as having “no foreign transaction fees” may still carry hidden costs. According to Schwartz, consumers should evaluate a card’s entire cost structure—including potential interest on carried balances and cash-advance fees—rather than focusing solely on promotional travel perks.

Did You Know? A “no-foreign-transaction-fee” label specifically refers to the surcharge applied to international purchases, but it does not exempt cardholders from standard credit fees like interest charges on unpaid balances or fees for withdrawing cash.

The Hidden Costs of International Spending

Travelers often assume that a card without foreign transaction fees is cost-neutral when used abroad, but financial experts warn this is a common misconception. Andrew Schwartz notes that the total expense of a card is determined by its broader financial structure. If a user carries a monthly balance or misses a payment, the interest and penalty costs can quickly eclipse the savings gained from avoiding transaction surcharges.

Expert Insight: The primary risk for travelers is prioritizing rewards over fundamental debt management. When a cardholder focuses exclusively on avoiding a single fee type, they may overlook high interest rates or cash-advance charges that are triggered by common travel banking habits, such as accessing local currency through an ATM.

Evaluating Financial Goals

Choosing the right card requires aligning the product with an individual’s specific spending habits rather than chasing the most prominent rewards. Schwartz suggests that the most effective financial tool is one that complements the user’s overall financial situation. Consumers are encouraged to look past promotional advertisements and examine how a card’s interest rates and fee schedule fit their personal budget.

What May Happen Next

As travelers become more conscious of total cost structures, issuers may face increased pressure to provide clearer disclosures regarding ancillary fees. It is possible that consumers will shift toward more conservative card usage, prioritizing low-interest options over high-reward cards that carry significant penalty structures. If these trends continue, financial institutions could see a rise in demand for cards that offer simplified, transparent fee schedules to attract more cautious, long-term users.

Frequently Asked Questions

What does a “no foreign transaction fee” credit card actually offer?
According to Andrew Schwartz, these cards do not charge a specific surcharge for international purchases, but they still operate under standard credit card cost structures.

Are there other fees to consider when traveling?
Yes. Schwartz notes that travelers may still incur cash-advance fees, interest on carried balances, and costs associated with missing payments, regardless of whether the card waives foreign transaction fees.

How should a traveler choose a credit card for international use?
Schwartz advises consumers to evaluate how a card aligns with their individual spending habits and overall financial goals, rather than focusing only on promotional perks or the absence of a single fee type.

How do you prioritize your spending goals when selecting a new credit card for travel?