xyz123, thank you for the oanda.com website.

Patrick, one of my credit card agreements to take effect Nov. 1 reads: "Visa USA Inc. or MasterCard International, Inc. will use their currency conversion procedures in effect when they process the transaction. Currently, to convert the currency to US dollars, they use either a wholesale market rate or a government-mandated rate and add one percent to that rate. We then add two percent to the figure provided to us. The currency conversion rate used on the processing date may differ from the rate in effect on the date you used your card". No secrets there. I don't use this card for foreign travel.
I did review one of my CC statements from the UK and see that the transaction date and posting date in most cases is the same and that the exchange rate to 8 decimal places is different for transactions on the same day. I suspect they are processing in real time.

Erinb, Please let us know how Penny's complaint is resolved.

To start with, you cannot add percents together, it is not mathematically correct.

For example if the wholesale exchange rate prior to adding any percentages on is $1.65, then a 1% markup added in would be $1.665 (1.65 x 101% = 1.665), or a difference of .0165. The question then is the 2% markup on the $1.65 or the $1.665 amount. The numbers are different, adding an additional 2% to the $1.65 is .033, for a gross of $1.683, but adding 2% to %1.665

comes to $1.6983, which is a dramatic difference.

It appears that the additional 2% is being added to the value that the 1% was already added to.

Hello,
I also am going to Scotland in 3 weeks and trying to figure it all out. I called amex. today and they state they will only charge wallstreet stated exchange rate and the 2%. And Bank of American (after many many phone calls to get the correct information) states also will charge the wallstreet stated exchange rate for the day plus 3%. I don't think you can get around all this. I also find in some hotels in scotland they do not accept amex. Which seems to be the cheapest way to go. I was also told today that ATM machines used in Scotland will give you that particular banks exchange rate for the day. And after calling several scottish banks in Edinburgh-the rate today was 1.81. Very high!!!! I am trying not to be concern to much-not alot you can do. However, I do not want to be careless.
Thank you, others, for your input.

Also, I just went on line. Here's an example of how something is so not right about this picture.

We both made purchases on our visa at Windsor castle for our admission fee. The difference in the time of purchase was less than 30 seconds. Both charges showed up on our bills that next day ON the 19th.

Remember same amount, 12.50. My credit union visa charges 1% only, no extra fees. the rate was quoted at 1.696 and a converted amt of $21.19. Yet hers was quoted at 1.7721 and a converted amount of 22.15.

At one of the historical exchange websites for that day, the average was 1.67776 and the high wa 1.6787. If I use the high and add 1% it is very close to my figure on my card. within .001. If I used the 3% the amount should be around 1.7293. Clearly citibank is charging much greater than the 3% they are telling people. I have check at three sites now and the historical high for that day is no high than 1.679. The highest they should charge with a 3% add on is no night than 1.73.

Clearly something else is being charged or they are using exchange rates not true to the history.

I will let you know what she finds out.

thanks guys!

I just read the fine print on some new credit card applications - one a Visa and the other a MasterCard. Both state that if you take a cash advance on a credit card transaction, that an additional 3%, but not less than $5.00 will be incorporated into the transaction. Now adding that to the markup of 1 % or 1% plus 2% is going to be high. Just do the math. By the way, if you do roll over a balance month to month then you need to add the APR on top of that.

Ah ErinB

Perhaps you have not read the whole thread or other similar threads. There is a simple way around the 2% charged by Bank of America...use a card issued by MBNA, Capital One or USAA. These are banks that do not feel it appropriate to rip off their customers for a currency conversion they have nothing to do with.

leslie, your math is wrong.

One pound equals $1.650
1% is 0.0165
Total 1.6665

2% of 1.65 is 0.033 Total 1.6995
2% of 1.6665 0.03333 Total 1.69983

The difference is 33 cents on one thousand pounds. It's not much per person but a nice amount on hundreds of millions of currency exchange.

xyz...

I know that but that does not help us on this purchase...geez...

No, seriously, I knew this about credit cards before I left. Thats why I use my credit union visa most of the time overseas. It's a great rate, they don't stiff me with a large % and they only charge me the $.75 per ATM transaction, which is same at home if I use another ATM than the credit unions. And Natwest in london doesn't charge international cardholders any extra. So for me it is a good deal.

I didn't even take notice when Penny was using a different card. She usually uses her American Airlines visa which gives her a great rate. I think she was using the citibank because it had a ungodly limit on it and she wanted to make sure she had enough.

For the future, we know what to do, we are just trying to get this straightened out now.

thanks

jsmith, I think you need to get yourself a new calculator.

$1.65 x 101% = $1.665
$1.65 x 102% = $1.683
$1.665 x 102% = $1.6983

The difference is a penny. But from what I've read, if you take a cash advance on a credit card, there is an additional 3% charged or $5.00 per transaction (whichever is higher), and that's not even taking into account the APR if you roll over a balance month to month.

$1.6983 x 103% = $1.749249

Wow, this is really becoming mind-boggling. The bottom line is this. My charge on Citibank is less than my friends' charge on Capitol One, charged at the same time, posted on the same day. I don't care if Citibank claims they charge 50% more or even 500% more, the bottom line the actual amount is less, so I really don't care. I'll stick with my Citibank, no matter what Capitol One says they DON'T CHARGE. Is that clear enough?? I don't care the reasons or the justification. The actual amount is all that's important to me, and time and time again the Citibank was the smaller amount, so I'm happy to stick with that.

sevakaur: I think you misunderstand how your ATM will work. The Scottish Bank will not charge you any "exchange" rate. They will give you £ at the commercial rate. They are not converting anything - you will ask for £ and get £ out of the machine.

Your own bank will convert it to a $ amount. It is highly unlikely you would be debited $1.81 at the current rates. I suspect that $1.81 you were quoted is the Scottish bank's exchange rate for $ travelers checks and/or $ currency.

Just reviewed some purchses I made on my Citibank MC in Paris - all were resonable dollar amounts incomparison to the Euros that the items cost. No excessive mark ups or complaints here. Erinb I certainly would pursue an explanation of the charges on Penny's statment, if only to get an answer straight from your CC company (and not all of us "second guessing" !) and she'll have the opportunity to ask them questions. I'm sure you would think to do this anyway, but when Penny is talking to the cc company, tell her to take notes regarding who she talked, to when the call was made, etc. The information will come in handy if she has to make follow-up calls.

Let us know what you find out!

Patrick..

Without going through the whole thread again I have a couple of questions for you...

1. Are you sure the amounts in the foreign currency were entered correctly and were exactly the same to the Eurocent or pence?

2. Are you quoting the rates off both of the statements or did you calculate the rates with a calculator. If the later, is it possible a wrong entry was made?

I am not doubting you believe what you are saying but the reality is, in all due respect to you, that it doesn't make sense.

Citibank absolutely tells its users that it imposes an additional 2% "currency conversion" charge (which we now know has nothing to do with currency conversion but is rather a rip off of the cardholder). Many on this board have verified the additional 2% charge. Capital One is very adamant, and others on the board have verified it, that it does not charge an additional fee about the 1% MC/Visa fee it passes along.

I just don't understand in this one case (was it just one case or a whole series of cases?) how the conversion rate for a charge by Citibank could be better than Capital One.

Please folks in this discussion let's not intermix cash advances or withdrawals from ATM's which might or might not involve other fees etc. We are talking here, and should be talking here, about purchases on a credit card.

If you feel the additional 2% fee that absolutely is charged by Citibank (not supposedly as some have written) is not a big deal, that the air miles you get from American Airlines on a Citibank card are worth the additional 2%, that is your perogative and certainly nobody should question that.

What folks are trying to do here is provide the information so other folks know what they are doing.

To repeat, from my research and from reading other posters, MC/Visa both impose a 1% surcharge on the interbank rate for credit card purchases in foreign currencies. This charge is 100% of the time passed along by the banks. Many of the large credit card banks, specifically Citibank, Chase, Bank of America, Bank One (First USA) then impose an additional 2% fee. Sometimes it is listed separately on the statement, sometimes it is not.

MBNA and Capital One do not impose the additional fee. They simply pass along the 1% Visa/MC fee. Some of the other banks do and some of the other banks don't. You should read the cardholder agreement which is supposed to spell this out. If after that, you don't mind being ripped off by a totally almost fraudulent (of course it's not fraudulent as the fee is spelled out and the banks can charge whatever they want) charge then go ahead, be happy and continue to contribute the large profits banks are making on their credit card operations. After all, nobody should tell anybody else how to or how not to throw away their money. Just be aware of what is going on.

I'm not quoting any rate. What I'm saying is the following (NOT REAL amounts, but an example of how I did it:
On July 10, we eached charged 56 pounds on our own cards.
On her statement it should 56 pounds or $86.67 posted on July 11.
On my statement it showed 56 pounds or $86.53 posted on July 11.

Then a week later we had similar things when we split a hotel bill in Amsterdam. Again the posts were the same dates showed the same exact amount in euro, but my charge in dollars was a few pennies less than hers.

I can't make this any clearer. I don't know how this happens, and I don't know how they arrive at the results. But all I know is it came out less dollars on my bill with a Citibank card than on her bill with a Capitol One card. TWICE!

Similarly I have looked at my Bank Statement and seen the posting for a certain date when I withdrew 300 euro. I'd note the actual dollar amount charged to my account, and divide one by another to get a "rate" that was charged. Then I'd see on my Citibank statement a charge for that exact same date (posted date, not charged date, to match the posted date of the ATM) and again divide the dollar amount by the euro amount and find out that there was no difference, very little difference, or sometimes a "better rate" for the Citibank than for my ATM rate. I have done this many times, and very rarely have I been able to come up with the charge amounts being even 1 to 2% higher than the ATM rates, for whatever reason, never could I find a 3% difference. Oh, and I'm not including any special charge for ATM withdrawals in that.

And regarding throwing money away. Let's assume for a minute that I charge $5000 on a trip to Europe. I get 5000 miles for that. It "costs" me $100 extra if I'm paying 2% more for my card. I consistently use 90,000 miles to get a business class round trip ticket to Europe with two stopovers that is worth a minimum of $10,000. You do the math. 1/16 of the ticket is worth over $550, a bargain for my $100.

Janis,
Thank you. I called several banks in Edinburgh and ask if I walk in off the street with american dollars what rate will I get to exchange to pounds and they all stated 1.81. I was amazed and that is why I called several different banks.
Seva

Patrick..

Thanks for your replay and its civil tone. Nobody was dissing you.

One quick point. Citibank is actually very good when it comes to ATM withdrawals. There are no add on fees for currency conversions on ATM withdrawals using their debit card or a plain vanilla ATM card. As a matter of fact, with many of their accounts, withdrawals from ATM's are not charged on their end and of course we all know that due to Cirrus/Plus regulations, European banks are not allowed to surcharge American debit or ATm card withdrawals.

And of course, as I said in my post with no leaning one way or the other, if paying the surcharge and getting the frequent flyer miles is worth it to you, that's fine and the only one you have to please is yourself.

Not that this makes any difference, but just to clarify. Citibank is my aadvantage Master Card for charges. My ATM is through Bank of America, my regular bank and checking account. They also are great on ATM's. I get a list of "partner" banks in Europe and if using them there is never a charge from BofA for the withdrawals. And beyond that they give me two "free" withdrawals per month from non partner banks. After that, the most I've ever been charged is $1.50.

Is is possible that the type of card from each bank makes a difference in the terms? Is someone using a platinum card and someone else using a "lesser" card? The banks might have different terms depending on what type of card you have. Just a thought.

sevakaur: That is what I thought happened. The rate for trading $ currency to £ would be the worst exchange possible. Your ATM transactions will be MUCH better. Stick to your ATM card for getting cash.