Additional credit card currency conversion fees
 

As most people know, whenever you use a credit card in a foreign country, both Visa and MasterCard add an extra conversion charge to the official exchange rate. I suppose that is fair since they handle the currency exchange. However, I just received a notice (one of those fine print notices) from First Card (a United Mileage Plus credit card)indicating that they will be adding their own 2% fee to foreign currency transactions. In my opinion, this is rip off by my credit card company. Are other credit card companies adding this type of charge? If not, I am going to seriously consider changing credit card companies for my foreign travel.

If you are an AAA member, the card issued by them does not have any additional surcharges beyond the 1% from Visa. An additional benefit is that you can charge travellers checks without a fee, its like getting a free loan for a month!

I usually use my MBNA Mastercard - I read in "Budget Travel" that they don't charge a fee, nor I have never noticed any fee (MBNA) on any of my statements when I use it in anouther country!

Brianna,<BR>I also have MBNA. MBNA does not charge MBNA based fee, but still make you pay for the 1% charge from the VISA/MC. You do not see it because it is buried inside the conversion rate on your statement. Just because you do not see it does not mean it does not exist. If you compare the rate on the statement against the official exchange rate, you are consistantly short changed about 1%.

Yes, my Chase Visa and Master Card charge us 2% but for every $ we spend we get one mile with OnePass Continental. It works for us. It is easier than carring cash or TC or even using ATMs and then paying with cash. We charge to our credit card everywhere, everything possible. And for small purchases where credit cards won't be accepted we use ATMs

How sucky of them. Oh well, I guess it's not too bad, that's only like $4 on $400 purchases...am I figuring this right? It still always seems that I get a good conversion rate using the credit card, better than exchanging loads of money.

Does anyone know if Capitol One charges an additional fee. Am leaving soon and will be using it.

That's $8 on a $400 purchase. There's no sense in paying it if other card companies are not. Since air miles are worth about 2 cents each, it doesn't make much sense to pay for them.

...$8? I thought you said 1%...How is 1% of $400 eight dollars?<BR>Just Curious, not being a snit!

I am with Gina. We too have OnePass and Visa from Chase. We charge about 70,000 a year to our credit card. How do we get those 70,000 miles any other way?

Bri<BR>See my original post. The extra charge being added by the credit card company is 2%. This is in addition to the 1% fee being charged by Visa/Mastercharge.<BR> <BR>Gina and Jean<BR>The reason I have a First Card United Mileage Plus card is to build up air miles. It has always worked fine in the past and will continue to work fine in the U.S where there are no extra charges. But if I am going to have to pay an additional 2% fee on my foreign purchases, I am just paying them for the miles they "give" me. For example, if I spent $70,000 to get 70,000 air miles, it would cost me $1,400 to get those miles. Doesn't make a lot of sense to me.

bri - it is 2%. they are talking about Visa and MC charging 1% for cash conversions, but some of the comapnies/banks that issue the Visa/MC such as Chase and First Card charge an ADDITIONAL 2%. So, you would be paying an additional 2% than if you had any of the normal credit cards (such as MBNA).

Gene--I called Capital One today, and Capital One does not charge a fee on top of the MasterCard fee.

Argh! Now I am SO confused. Snorkelman, I do have MBNA. <BR><BR>Now - with my MBNA (no fee) am I just paying the 1% Mastercard fee...or a 2% fee?<BR><BR>From what I can gather it is 1%, which is worth the hassle for me.

Hello everyone. I DID NOT post "my" previous message here. I did not even own any credit cards with Chase Manhattan Bank.<BR>Someone is using my name and address here.<BR><BR>

Brianna, you are only paying 1 pct with MBNA (as I understand it, unless they changed their policies). I would just forget that and consider it not paying anything as you can't get a credit card without that 1 pct "fee", so it is the base case. Currency exchange fluctuates that much a lot of the time. I always thought First charged an additional two percent already, as I have one (which I'm getting rid of as I don't like them much anyway)--it must vary by product, their regular cards already had it, I believe. I got a Capitol One card intentionally for foreign purchases because there is no charge beyond the 1 pct and it gives FF miles for only a $20 a year fee (they have a variety of products). But, you don't really have to use the miles on airlines, so it's sort of like a cash back card really (they give you one percent back on your purchases, essentially, if you prefer that). I'd rather choose flights and get deals where I can than use up 25K miles per domestic flight--I can choose to get back $250 in cash instead with them. It would take me about a zillion years to spend $70K on a credit card, but if you do that, I could see it would make sense to pay a higher fee to get FF miles.<BR>

Anyone know if American Express is doing this kind of thing?

Here is the story about credit card surchages.<BR><BR>1. Visa and MasterCard do the actual conversion on a charge made in a country outside the US on US issued credit cards. They use the interbank rate and add a 1% charge. This is fair as they do the conversion and give you the best rate anyway and there may be currency fluctuations.<BR><BR>2. Once the charge is converted, it passes to your bank. No other currency conversions are done.<BR><BR>3. In the past two years, certain banks have begun charging an additional 2% on foreign charges. These unscrupulous banks include Citibank, Chase, First USA, Bank of America, Providian. Also note many bank credit card operations are controlled by these large banks. So, for example, AT&T's credit card operation is controlled by Citibank so they add the surcharge.<BR><BR>3. Of the large credit card banks, only MBNA and Capital One do not add this fee.<BR><BR>4. The thing about this fee is you get no service from it. You get lies and lies from the so called customer service reps who are told what to say. They tell you things like it is a standard industry practice (it is not), that the fee is for the currency exchange (it is not as MC/Visa actually do the exchange). You talk to these clowns and they don't have a clue.<BR><BR>4. For some reason, First USA exempted its 2 prime airline cards (United and British Airways) from this charge. Now I have read that they will begin putting the charge on the United Airlines card in the near future. I have received nothing regarding my British Airways card. I called them and the customer service rep assured me they are not adding this charge but as I said rarely do the customer service reps give you a right answer.<BR><BR>5. This charge could have been stopped if stupid people did not continue to use the credit cards issued by these scoundrels for foreign charges. It was like they put a toe in the water seeing how hot it was. But of course people are just plain dumb and don't read the changes in terms; nor do they read the advise given on these boards. Or they think as somebody else posed, what's the big deal about 2%.<BR><BR>6. Perhaps if people began realizing what is going on, it can still be stopped. Repeat, if you use a credit card issued by Citibank, Chase, First USA(?), Bank of America, Providian you are just throwing away 2%. You get nothing for that additional 2% charge. The currency conversion is done by MC/Visa. Only use for foreign trips credit cards issued by MBNA or Capital One or many of the smaller banks which want your business. Write a letter to Citibank et al. telling them to go to hell with this rip off fee and that you are changing credit card banks. If enough people had done this originally, this fee would have disappeared.<BR><BR>7. You don't believe me. About five or six years ago, banks had to drop their annual fees for credit cards. Why? Because people were smart and switching away from banks that ripped them off with annual fees. This could have been the same thing but again, as I said, people just are dumb and don't realize the implications of these additional charges. Rip up those Citibank, Chase, First USA, Bank of America, Providian cards. The people issuing them are in the business of ripping you off.

Jeff, that was one of the most thorough explanations of the extortionate and outright fraudulent practices by banks I've ever read, thanks. <BR><BR>While I empathize with your frustration, let us be clear as to who is at fault. It is not the consumer's laziness as you imply. In the case of the annual 'fee', the impact was immediately felt by consumers beginning on their very next statement, whereas the impact of the conversion lie is delayed until the consumer takes a trip abroad. Worse, whereas the annual fee was clearly stated on the monthly statement, the conversion extortion is buried in the amount stipulated as being the conversion rate. It takes a relatively knowledgeable consumer to see through this lie. <BR><BR>Worse, once one is on vacation, as I said in another post, one is not exactly dealing from a position of strength. One's choices are limited, and they aren't great. ATM fees (those charged for using a bank other than one's own) are also significant, and it becomes a matter of choosing between a rock and a hard place.<BR><BR>That said, I agree with you that we should continue to lobby for change. It isn't just the money. Why is it so important? Because this lying and deception in financial businesses creates the kind of climate that leads to an Enron.

I have a USAirways card thru Bank of America and guess I have been/will be charged the extra 2%. What other types of cards could I get that would still allow me to accrue ff miles for USAirways and no extra charge for foreign purchases?

Yes, indeed, Jeff, that was a great explanation! I get so angry I just foam at the mouth and sputter.<BR><BR>I have both MBNA and Citibank, but don't use the Citibank card abroad. The fact that they can just sneak this fee in (it's not delineated on your bill and I don't even think it's in their fine print) is reprehensible. It's like ATT charging 11% for a 7% federal universal service charge. 1/3 of my local phone bill consists of such fees--what is that? But it is so convoluted that the consumer just gives up.<BR><BR>Curiously enough, I don't think we have ever been charged an ATM fee until last year, and even that was only at certain places. Wonder how you can find out who is going to charge the fee?

right on Jeff. Good words of advice.<BR><BR>I do have a question. When the extra 2% is taken from you, how is it done?<BR>Is there a line item on your credit card statement saying we clipped you 2%, or is the 2% charge slipped in on the exchange rate???? <BR><BR>I have not actually paid the extra 2% yet, and hope I never will. So not knowing from experience, will someone please clue me in??<BR><BR>I have both a Wachovia Card and a Bank of America card. About 12 months ago, BOA started the sneaky practice of charging an extra 2% conversion fee for non US dollar transactions ago. <BR><BR>When I went to Europe last year, I used my Wachovia card exclusively because it did not clip me the extra 2%. Now Wachovia has added the 2% charge.<BR><BR>So now I am getting a card through AAA.<BR>They tell me that there is no extra 2%.<BR>Comments above bear out this assertion.<BR><BR>Getting clipped on currency conversion is an old game, time honored. <BR>As a student, with courses in international finance and international trade on my transcript, several of us who were traveling together around Europe used to play games with the exchange rates. If we could save the price of a beer each, it was worth it.<BR>We had more time than brains and more brains than money. <BR><BR>There was always a buy rate and a sell rate, but it was different from bank to bank or exchange joint to exchange joint. So when we went from one country to the next, we would fan out to different banks in the area and check out the exchange rates.<BR>Then we would pool our money and buy at the best rate. <BR><BR>One day riding a train, we figured up how many exchanges it would take to reduce $100 to $5.00!!<BR>The idea being that on paper you would go to the exchange window where the rates were exorbitant and convert the $100 to local currency. Then you would go to another widow and convert the foreign currency back to dollars. <BR><BR>The idea was to see how few times on paper you could make a round trip (dollars to local; local back to dollars) and still have $5.00 left over. At 8% shrinkage per round trip, it did not take long!! Like 9 or fewer.)<BR><BR>It was a fun game and as students intersted in foreign trade we learned a lot quickly. <BR><BR>The interesting thing we found at the time was that the percentage of the commission was not consistent going and coming. In other words, if you were charged 4% conversion fee exchanging dollars to currency x, you were not necessarily charged 4% going from x to dollars.<BR>It all depended on the demand for dollars at that time. If the banks were not anxious to part with their dollars, the rate to buy them was well up there!! And the rate to buy them was more in your favor.<BR><BR>We also figured out that the best way to exchange was to talk some guy wanting currency X into doing business with us at the wholesale rate. We both made money!! For example, if we were in Germany and were going to Switzerland, we needed Swiss Francs. If some guy came up with Swiss Francs wanting DM we could do business. <BR>Each had what the other wanted and the price was right, and an impromptu market sprang into being. It was easier to do at a train station where there is a lot of noise and confusion anyhow. Banks did not like the idea of impromptu foreign currency exchanges taking place in the lobby.

Bob, I've always suspected it, but now I know you are nuts! (and from long date) ;-)<BR><BR>You never see the 1%, the extra 2% or a conversion rate; you just see what the price was in Euros and then what your CC is charging you in dollars. I read somewhere here that you can find a history of the exchange rate for each day so you can see what you should have been charged, but I'm not sure that would be accurate, since that is the big money rate. Once I charged something with each card on the same day, but I've forgotten what I learned. I'll try the same experience next trip. (Maybe I'm nuts, too!)

Hah! I found some charges in June, 2000. Same day, MBNA exchange rate 6.90; Citibank exchange rate 6.73, so it looks to me as if Citibank is charging an extra 2.5%.<BR><BR>Bob, don't be too sure you have never been charged because you can't tell by just looking. I didn't know until I read an article somewhere. Citibank shore didn't announce it!

You're right that you could never expect to get the 'official' rate but what you should be being charged on a CC is the official rate plus 1 per cent. A difference of greater than (official rate plus 1 per cent) is generally a gouge. (of course, it gets tricky because you have to know the official rate on the day MC/Visa actually clears the given transaction. But, it's generally pretty close to the rate you'd find on the day of departure.)<BR><BR>I don't know what my CC rate is at the moment but I do know that for a cheque rate (not the cash rate) they charge 3 per cent for a Euro conversion, or 2 per cent more than what MC/Visa charges them for a conversion.<BR>

I think some of you are a little slow to get the message. I know what I am doing when it comes to exchange rates.<BR>The point of the paper exchange game was not to give money away, it was to understand just what a battering your money takes when you exchange frequently between foreign currencies.<BR><BR>How do I know I was not clipped by the banks on my credit card bills? Because of two facts: <BR>1. I had my charge bills in the local currency.<BR>2. I knew the local exchange rate into dollars for that day. <BR><BR>So, I wrote down what the dollar cost should be for each charge slip as I went. When I got home I looked at my Visa bill and compared it with my notes. The deviation between what I figured and what I was actually charged was somewhere in the 2nd or 3rd decimal place. Usually it was a function of daily currency price fluctions. <BR><BR> You may not be aware of it, but exchange rates fluctuate during market hours just like the stock market, only the daily percentage swing is not nearly as great. You don't usually get a 2% swing in the value of the dollar against the euro in one day whereas daily swings in stock market indices of more than 1% are common.<BR><BR>Like today, you got any idea what the swing in the value of the euro was against the dollar?? Doubt it.<BR>It was +.65%. <BR><BR>As for being nuts, since when was earning or saving money nuts? <BR>With 5 or 6 of us traveling together, and exchanging quite a bit of money even for college students, we could save or earn about $20-30 for the group by what we did. Question: if you saw $30 lying on the sidewalk would you take the time to pick it up? My guess is you would. Or am I wrong??<BR><BR>And am I to presume that you did nothing to learn about your major field of study outside of the classroom when you were a college student? <BR><BR>Given the syllogism advanced here, when pursued logically, crazy people pick up money, and by inference sane ones let it lie there. But somehow, I don't think this little logic game holds water. <BR><BR>Our method was much more reliable than walking around the streets of Paris or Geneva or Munich looking for money lying on the sidewalk!!<BR><BR>Besides, being an international economics and foreign trade major, at the time, it was my business to understand exchange rates. And I think our games mastered the subject. We certainly learned to convert from Austrian schillings to Italian lira to Swiss francs, to French francs to German marks in a big hurry.<BR>At that time we used to question all of these currency deals and predicted even then that someday one currency would be used in western Europe. It certainly took long enough. Like a lot of ideas, it made too much sense. And vested interests were against it. (You ever wonder just how much banks make off of currency exchange!! It ain't chicken feed, I can guarantee you that.<BR>And that game goes back before the time of Christ. Anybody remember the episode with the money changers in the temple?) <BR><BR>At least what we did was more informative than talking about women's clothes.<BR><BR>

Bob, have you read that article by an astronomer who says that the universe may not be indefinitely expanding but may, in fact, be dying? <BR><BR>I'll bet you never once looked up into the nighttime sky and considered this possibility, did you? Admit it! You didn't!

Bob, Bob, I was just kidding! And thanks for the tip of writing down the exchange rate each day (if I can just remember to do it). I also noticed the daily fluctuations in exchange rates of charges posted the same day. But I must admit, high finance is beyond me. More power to you!

I have an AT&T Universal Card. The last time I checked on this (November), AT&T was charging a 3% fee for using the card outside the USA.<BR>

Sue,<BR>There is really no need to write down the exchange rate during the trip. You can look up historical exchange rate after the fact. I am sure there are several sources, I use this one:<BR><BR>http://pacific.commerce.ubc.ca/xr/data.html<BR><BR>Although there are many options, all I input are date range of interest, base currency (since it is a Canadian site, the base is Canadian by default), then target currency (Euro, probably).<BR><BR>After studying the rate I eventually got hit with, I noticed that ATM exchange rate appears to be real time while CC exchange take place many hours or even a day later. So while ATM rate matches closely to the official rate, the CC exchange lags the transaction date.

Thanks, Greg, that's way cool. My CC also lists post date, which I assume is also the date the charge is converted?

Bob.<BR>I have a AAA Visa card issued through FirstUSA on a recent trip to Belize a charge that should have been $150.00 per the exchange rate that day came through at $155.89. A charge that should have been $29.75 came through at $30.92. In Mexico a charge of $28.50 came through as $29.64. so yes my AAA Visa does charge somthing extra. These charges were just made 3 weeks ago.<BR>Victoria