Travelling overseas or shopping from international websites comes with hidden costs that catch many Malaysians off guard. Most Malaysian credit cards charge between 1% and 2.5% in foreign transaction fees whenever you spend in a foreign currency, and that’s just the start.

If you’re a frequent traveller or someone who regularly shops from overseas retailers, understanding how these fees work and knowing which cards offer better rates can save you hundreds, even thousands of ringgit each year.

What Are Foreign Transaction Fees And How Much Do Malaysian Credit Cards Typically Charge?

A foreign transaction fee (FTF) is what your bank charges when you use your card to make a purchase in a currency other than Malaysian ringgit. This applies whether you’re physically overseas at a shop in London or Tokyo, or sitting at home ordering something from Amazon US.

The total fee you pay typically has two components:

The network fee: Visa and Mastercard charge around 1% to process the currency conversion. This is unavoidable when using most credit cards.

The bank’s markup: Your card issuer adds their own fee on top, which is usually another 1% to 1.5%. Some premium cards with American Express can charge as high as 2.5% just for the Amex network conversion.

This means that when you see a card advertised with a “1% foreign transaction fee,” that’s only telling you half the story. The actual total cost is closer to 2% to 2.5% once you include the network charge. If you spend RM10,000 on an overseas holiday, you’re paying an extra RM200 to RM250 just in transaction fees.

Should You Pay In Local Currency Or Malaysian Ringgit When Using Your Card Abroad?

One of the biggest traps for travellers is Dynamic Currency Conversion (DCC). The simple rule: always pay in the local currency.

When you’re at a shop or ATM overseas and given the option to pay in Malaysian ringgit instead of the local currency, decline it. DCC seems convenient because you see the ringgit amount immediately, but the merchant sets a less favourable exchange rate than Visa or Mastercard would offer, and you may still get charged an extra 1% DCC fee on top. You’re paying more than the standard foreign transaction fee because you’re hit with both a terrible exchange rate and extra charges.

If you spend RM5,000 on a shopping trip and accept DCC, you could easily pay an extra RM100 to RM200 compared to letting your card handle the conversion.

The same applies at ATMs. If the machine asks “with conversion” or “without conversion,” always choose without conversion.

How Do Currency Conversion Rates Affect My Credit Card Charges When Shopping Overseas?

The exchange rate itself isn’t where you’re losing money.

Visa and Mastercard use daily exchange rates very close to the mid-market rate (the “real” rate you see on Google or XE.com). This base rate is competitive and fair.

As explained earlier, the costs come from the two fees added on top: the card network’s ~1% processing fee, then your bank’s 1-1.5% markup. These two fees, not the exchange rate, are what increase your costs.

What Are the Best Credit Cards For Frequent International Travellers From Malaysia?

While no major Malaysian credit card offers completely zero foreign transaction fees (the Visa and Mastercard network charges still apply), several cards keep their own bank markup to just 1%, making them more affordable for overseas spending.

The “best” card depends on your travel habits and spending patterns:

For Maximum Value And Payment Flexibility Overseas (Top tier)

Alliance Bank Visa Infinite

• This card offers 10× Three-Year Bonus Points (TBP) for every RM1 spent overseas, which can offset the standard 2.25% FTF. With efficient redemptions, you can achieve a net gain of around 0.25% or more. This makes overseas spending cost-effective, supported by a 0% Flexi Payment Plan for foreign transactions (including flight tickets and hotel bookings) and complimentary lounge access

For High Spenders Who Value Rewards (Spending RM50,000+ annually on travel):

HSBC Visa Signature

• This card has a higher annual fee, but the 8x-10x reward points can offset the 2.25% foreign transaction fee if you spend enough and redeem points strategically for flights or hotels

For Moderate Spenders Who Want Simplicity (Spending RM20,000-50,000 annually):

RHB World Mastercard

• No annual fee for life, straightforward cashback, and 2.25% total FTF makes this ideal for travellers who don’t want to think about point redemption

For Air Miles Collectors:

UOB PRVI Miles Card

• If you’re specifically trying to accumulate miles for award flights, the 5x UNIRinggit earning rate on overseas spending makes this the best value

For Budget-Conscious Travellers:

Bank Rakyat Platinum Explorer Credit Card-i

• The lowest effective FTF (around 1.25%) and free lounge access make this excellent for travellers who prioritise low costs over rewards

For Premium Travellers (High income, frequent long-haul trips):

CIMB Travel World Elite

• If you meet the RM250,000 income requirement and spend RM240,000+ annually, the 10x points and Plaza Premium First access justify the RM1,215 annual fee

The right strategy for many travellers is having two cards: a rewards card for large purchases where you want insurance and points, and a low-fee card for everyday overseas spending.

Should You Inform Your Bank Before Travelling To Avoid Your Card Being Blocked?

Yes, it’s still a good practice to notify your bank before you travel, even though many banks can see from your spending patterns that you’re overseas.

Malaysian banks use fraud detection systems that flag unusual transactions. If your card is suddenly used in a different country without warning, the bank may block it as a security precaution, leaving you unable to make purchases or withdraw cash until you contact them to verify the transaction.

Small Percentages Add Up Fast

Foreign transaction fees might seem like a small percentage, but they add up quickly for frequent travellers and online shoppers. A family spending RM15,000 on an overseas holiday would pay around RM300 to RM375 in foreign transaction fees alone using a standard credit card.

The most expensive mistake is accepting Dynamic Currency Conversion, which can cost you far more than any foreign transaction fee. Always pay in the local currency and let your card or bank handle the conversion at a proper rate.

Choosing the right credit card based on your travel frequency and spending habits reduces the cost of spending overseas and keeps more money for the experiences that matter.

Compare the latest travel credit cards on RinggitPlus to find the card that suits your spending habits.

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*Article information verified as of 5 December 2024. Rates, fees, and promotional offers are subject to change. Always check with the card issuer for the most current terms.