I am not a very savvy financial whiz, but based on some of the comments on this board and other places, I decided to go ahead and get a Capital One card that I would use for foreign travel, making sure to confirm that I was signing up for one without a currency exchange transaction fee.

I have just returned from a trip to Portugal, where I used the new card almost exclusively. But on one occasion, I decided to put identical charges on both my Capital One card and my Merrill Lynch Visa card (the transactions happened within a few minutes of each other). Now that I'm home and have gotten some bills, I was surprised to see that the Merrill card gave us a rate of $1.49 on the purchase, while the Capital One card gave a rate of $1.58. How can that be? Do companies use different exchange rates? I guess I'm going to give up trying to outsmart the credit card companies.

Are you sure you are reading them right? The € hasn't been as low as $1.49 for quite a while.

Today's rate is approx $1.59.

I agree. For the last month, the exchange rate between the US $ and the € has run steadily between $1.52 and $1.58 per €1.00. There was a brief peak of $1.59 that did not last out the day.

If you were billed at a rate of $1.49 = €1.00 then Merrill Lynch made the mistake.

I am a little surprised at the difference you report, but you can verify the interbank exchange rate on the day of your transactions at this web site:

http://www.oanda.com/convert/fxhistory

No need to take our word for it.

I am assuming both transactions were euro based.

At any rate I don't quite comprehend your last comment about outsmarting.

Exchange rate fluctuate all day long. Some credit card issuers add on 3%; Capital One so far has not done so.

I agree that something is funny about this, and it lies with the Merrill Lynch bill, most likely, as the Capital One rate is normal. If the rate did vary that much (I don't think so, as others said) within a short time, it could be related to the dates of the transactions. The date of the exchange rate and the conversion is not necessarily the exact date you made the transaction, but should be within a day or two of it.

That Merrill Lynch card sounds pretty good, if that is correct -- unless they added some line item on another part of the bill which added on some charge for that transaction. Some credit cards have a separate line item for the markup. The basic rate still shouldn't vary that much.

Hi LR,

In Feb, 2008 the Euro was $1.51 and has been rising ever since.

When did you make these charges?

I think people seem to be forgetting that banks don't necessarily use the exact same rate for transactions between institutions that the public using an ATM gets, for example.

The rate probably also depends on exactly when the transaction was put through from bank to bank.

And, of course, there is that old "issue" for which some of us have been repeatedly SHOUTED DOWN when we brought it up..the temerity to suggest that Capital One is NOT losing any money by not charging a foreign transaction fee but making money by using a poorer exchange rate.

All the "experts" here have sworn that it isn't so and who am I to disagree with the experts..but it does make you wonder, doesn't it?

Well, Dukey, some of us have actually made a foreign transaction on our CapOne card, utilized the internet to get that day's rate, and performed basic mathematics to see how the converted charge compares. Numbers don't lie, people lie.

Oh dear, perhaps I need one of these:

And when you did that, Travelnut, did you find that CapitalOne gave you a fair exchange rate, or an unfaiir exchange rate?

So are we talking $5.00 more on a $500 transaction? What's the big deal? Hardly worth discussion.

I have a Capital One charge card, have for many many years, and they do not add on a large markup to the interbank rate. There is nothing wrong whatsoever wit their exchange rate, it is very close to interbank. I have done many calculations of what their exchange rate is on many bills over a lot of years, and it is not inflated to incorporate a seven percent markup (which would be going from 1.49 to 1.59 or so).

yea, absolutely, Capital One gives one a "fair" exchange rate, it's very close to interbank.


I checked and the offricial exchange rate was around 1.49 back at the end of February. The OP never said what date these exchanges took place, but I think it is possible it is accurate if they were done around the end of February, but the one charge wasn't actually sent to the CC company until around mid-April when the rate was more like 1.58. I believe one could figure that out, though. If the transaction were around 3/1 and the rate Capital One used was 1.58, you could call them up and ask why.

I called up a CC company once to ask them that as the rate was a couple percentage points different from the date (nothing like 7 pct), and they told me the exact date the conversion was made, and the transaction posted, and it was not the same as the date I made the purchase.

Go to xe.com/ccc

Follow the instructions. See what the net rate actually was.

The OP said s/he "just returned" from Portugal, so I'm guessing that the transactions took place in April. The rate has been at 1.57-1.58 all this month, according to day-by-day records at oanda.com, so s/he should look at that 1.49 transaction as a gift from Merrill.

Thanks everyone for all the comments. The transaction took place on April 12, and you're right that $1.49 is substantially below the posted exchange rate for those days. The $1.58 is in fact exactly the posted exchange rate, so I have no gripe with Capital One.

Unfortunately, I only made one purchase with the ML card, so I can't determine whether the "gift" rate was a mistake or a regular practice. I can't believe it's the latter, so I assume there was some blip that caused that to happen. Unfortunately, it was a very small purchase!

what Christina said

If Merrill Lynch is jackpotting on the exchange rates, let's all jump on the bandwagon.

Usually the we are the ones paying into the pot!!

Perhaps they were having some kind of an unadvertised contest.

Interesting. Maybe that's why Merrill is having record writedowns. Still reported a quarterly loss just not long ago.



I wasn't aware that Merrill offered a Visa card though. Out of curiosity, how does this work? Is it linked to a brokerage account, if you don't mind my asking? I've an Amex through Fidelity, for example.

Just for the historical record, the dollar broke the $1.50 barrier on February 28, 2008 and has not dropped below that figure since then.
may well
The US $ - € exchange rate cracked the $1.60 today. I just looked and the current rate is 1.5976.
New territory and no end to the decline that I know of.

If central banks in Europe raise the interest rates and the Fed cuts the US rates, I have a good idea which way short term investment capital will be flowing. Relative to New York, it will be going eastward to London, Paris, and other major European markets offering substantially higher returns on interest bearing accounts.

It's been some years since I've had my Merrill Lynch Visa account. However, when I did and also used my Citi-Visa on the same day, regardless the amount of purchase, I always got a better rate from ML. This was true also when using either of their cards (Merrill ATM or Citi ATM) for local currency withdrawals.

Some euros will be flowing to the USA to buy up foreclosures.