Credit Card Foreign Transaction Fees
 

I have several different credit cards, among them Visa MBNA. I received a notice
telling me that they will now charge a 3% Fee on all purchases made in a foreign
country in addition to any other applicable transaction fees. Are there any Credit
Card companies that do not charge this outrageous fee?

Yes. Capital One (I think), many credit unions (I think), and most brokerage houses (I know).

Here's an article that addresses just this issue:
http://www.usatoday.com/travel/news/...ard-fees_x.htm

You might also do a google search on credit card fees, particularly on foreign purchases. There's been quite a lot written about it.

Yes, USAA does not charge any foreign transaction fees, but does pass along the Mastercard 1% transaction fee. Additionally, you get 1.25% cash back at the end of the year for all your Mastercard transactions.

That's a total of 4% with MBNA when you consider their 3% plus VISA's 1%. Additionally, if you get stuck with DCC overseas, that's a total of 7% on all your transactions. A little hefty in my opinion. ((b))

Ask your local credit union about its credit card. The same question applies to ATM withdrawals. Your bank may charge a fee unless you withdraw your money from a member bank. But your credit union might allow you to withdraw for any ATM in the EU without a fee.

I just got off the phone with my bank and they told me about the conversion fees. She says Visa typically charges 3%. My "Check Card" is through MasterCard and as of yet they don't charge a transaction fee.

The fees depend on your bank and which provider.

Also my Credit Union and Local Bank do not charge for international ATM use so definitely look around. "Small guys" are usually cheaper than the "big guys".

If you search on this site, you will find a lot of discussion on this, but here is my take on it...use an ATM card, not a VISA card, one is taking money out of your account, one is giving you a cash advance..I think we can agree on which is more expensive! Secondly, do not just say ...Gee, they charge 2% and the other guy is 0%, so 0% is lower than 2%, right?...ummm, not necessarily. It's like the currency exchange booths who say they convert your money with NO FEES...no business is in business to give money away, where they can ding you is on the EXCHANGE RATE...so the 0% guy can make his money by having a higher exchange rate...so you need to know the TOTAL COST of taking out that momey from that machine in Europe...fees are only one component...
My thoughts..

M

"I received a notice telling me that they will now charge a 3% Fee on all purchases made in a foreign country in addition to any other applicable transaction fees."

To be precise they are now SHOWING the 3% fee as a separate item rather than hiding it in the exchange rate

Big Turtle if you're talking about credit cards, your banker is wrong on two accounts. First of all both Master Card AND Visa charge 1% on foreign transactions. Your bank (or the issuing bank of the credit card, rather) may add an additional one or two percent to that, regardless of whether it is Visa or Mastercard.

My husband did the research so I am not positive this is accurate but he tells me that Capitalone is the only one that has the lower rate of 1% for charges not cash advances. So we use our ATM card for the cash advances and the Capitalone card for charges such as our room or rental cars and dinners usually.

I hope you mean cash "withdrawals" and not "advances." An advance is a loan, and you get charged a Cash Advance Fee the instant the transaction takes place, and interest accrues from that moment.

Visa and Master Card assess a one percent International Service Assessment. Whether your card issuer passes it through or absorbs it is up to them. Both my Smith Barney and Schwab cards eat it. Read all about it:

http://www.corporate.visa.com/pd/con...x_faq.jsp#faq6

"I received a notice telling me that they will now charge a 3% Fee on all purchases made in a foreign country in addition to any other applicable transaction fees."
To be precise they are now SHOWING the 3% fee as a separate item rather than hiding it in the exchange rate>>

Not really -- MBNA actually did not used to charge a foreign transaction fee, and within the last year or so they have changed so they are. Although most of their card affiliations started that last May, I think. I still have one of theirs that does not have that fee, though (AAA MBNA VISA).

Capital One (which I have also, and like) is not the only card that doesn't have such a fee, but it is one of the most wellknown national brands that way.

Let's make it as simple as possible to understand...

Visa and mastercard lost a suit recently regarding disclosures of these fees and many banks are now beginning to show these fees separately whether it be for an ATM withdrawal on a debit card or a credit card transaction. These fees are not new but the banks used to hide them.

Now in converting a foreign charge into your home currency (assume it is US dollars) visa and mastercard use the interbank rate to which they add a 1% charge when the transaction is presented to your bank for processing.

Now at this point the charge has been converted and there is no further currency exchange risk.

Your bank has 3 choices..

1. Simply pass along the 1% fee. For years that was what MBNA did. USAA does that too.

2. Add an almost criminal additional fee which is usually 2% and sock it to the customer. This is what traditionally large consumer unfriendly near criminal banks such as Citibank, Chase, First USA (now part of Chase), Bank of America have done. They are now being forced to disclose these fees on statements; these fees are not new.

However, MBNA once upon a time a fair bank on this began charging the additional 2% on many of its cards but not all last May...now they are in the process of being absorbed by Bank of America which charges the additional 2% fee and it is only a matter of time before they put this onerous near criminal fee on all its credit cards

Why near criminal? Because the banks are charging for a service they are not providing. They have nothing to do with the currency exchange or the risks of currency fluctuatons. Once it reaches them, visa or mastercard have converted the currency...it doesn't matter if the charge was made in New York, London or Timbuctoo for that matter. They do not provide any service on this and hence they are charging this fee because they feel like it...a fee for no service. Hence it is near criminal.

I have no problem with the 1% fee, visa or mastercard do assume risks in terms of currency fluctuations and that fee is fair...they do the work.

3. The third alternative is to eat the fee completely...to the best of my knowledge the only bank that doesn't pass along the 1% fee is Capital One.

Almost every other bank that says they don't charge a fee passes along the 1% fee (USAA and formerly MBNA) as well as most credit unions etc.

Hope this clarifies and this information is correct.

I think it's the Visa 1% that the banks were forced to disclose separately. They may not have added other fees on top but now most of them are. And you most likely will not really know until you a)receive your disclosure and b)try it out real-time. The phone operators don't have a clue.

One other point...

As part of this disclosure business and because of the growing cancer called dynamic currency conversion which in effects shuts visa/mc and the banks out of some of this lucrative foreign exchange fees...visa and mastercard both announced they intended to extend the 1% fee noted above to dcc transactions.

Because of the bad publicity, visa said it was temporarily withdrawing this charge...I don't know (see there are things I don't know but at least I admit it) if this fee is currently in effect and once again banks have the right to eat the fee, pass it along, or impose an additional fee on their own.

Which is even more near criminal behaviour as in the case of anybody being imbecilic enough to allow a merchant to pull the dcc scam on them, no further currency exchange is carried out so how the hell does visa or mastercard justify additional fees on top of the fees the merchant pullnig the dcc scam imposes?

"...so how the hell does visa or mastercard justify additional fees...?"

What do you think their datacenters run on? The 1% probably just covers their cost of doing business.

No, I think the banks are supposed to do the paperwork (OK, computer work) for free because after all they're not a business to make money. Right?

I don't get this idea that it doesn't "cost them anything" so they shouldn't charge anything. Where does the money come from to build their buildings and pay their employees? Everything they do should carry some sort of charge. What kind of business are some of you in? Charity?

Of course banks have a right to make money and charge fees for services provided...I don't question that for a second.

But they make plenty of money on their credit card operations...they get a piece of the action for every charge made...they make plenty of money from people dumb enough not to pay their bills in full each month and pay their interest rates.

What irks me is that in this case they have taken one class of transactions and lied and told us they are charging 2% or whatever for currency exchange when they perform absolutely no role in the foreign currency exchange process and it is the lie that there is a fee they have to tack on to exchange the currency is what makes this particular fee reprehensible and quite frankly almost criminal in nature.

Citibank doesn't lie to me that I'm aware of. On my credit card statement each month when I have a foreign transaction, at the bottom it says, "Purchases -- foreign transaction".
They then charge me a fee for making a foreign transaction. They never call it a currency exchange fee. That's your term, not theirs. Yes, I did a foreign purchase and they charge me for doing that. Big deal. I have an idea. Next time I go to Europe, I'll have all the places send my charges directly to you. Then a month or so later you can let me know how much they are (you'll of course have paid them in full the day I charged them), and then I'll send you that exact amount of money and you won't charge me anything. Sound like a good deal to you? After all there's no reason you should be charging me anything for lending me money for weeks at a time or for temporarily paying my bills for me.

By the way, Citibank has never gotten another penny directly from me, as I've never paid a finance charge and never paid an annual fee (at least so far). So once again. I really don't mind that they charge me 2% of my foreign purchases when they save me the aggravation of paying them all myself, and they actually are "lending" me the money for up to 6 weeks from the time I get my merchandise to the time I pay them for it. I'm perfectly happy with that arrangement (and we won't go into the fact that at the same time they give me enough miles that I can fly to Europe free every year Business class).

And yes, I do know that they get some money from every transaction. The seller pays them -- but today it is something like an average of 1.5% of sales, not the 3 or 5% sometimes people here claim.

If you want to complain about something, why not complain about the percentages added to your gasoline bills that go to pay oil executives multi-million dollar retirement schemes -- or help provide multi-billion dollar profits?

btw, Target card says,

"International Service Assessment Fee of 1% of the amount of each foreign currency transaction made outside the U.S. (excluding Puerto Rico and the U.S. Virgin Islands)."

So add them to the 1% list.... (I recently got one when making a large purchase there to save 10% - I used in Europe recently and had no problems).