Additional credit card currency conversion fees
Feb 12th, 2002, 12:20 PM
#1
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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.
Feb 12th, 2002, 12:36 PM
#4
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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%.
Feb 12th, 2002, 12:40 PM
#5
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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
Feb 12th, 2002, 01:12 PM
#11
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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.
Feb 12th, 2002, 01:15 PM
#12
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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).
Feb 12th, 2002, 02:44 PM
#16
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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>
Feb 22nd, 2002, 02:23 AM
#18
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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.
Feb 22nd, 2002, 03:57 AM
#19
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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.
