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).

..but they don't charge you a fee for US domestic purchases, now do they? The question is why...what's the difference? They are taking one class of transactions and treating them differently and while because of all the disclosures law suits the banks have lost they are spelling out the fees, they can no longer hide them in the total exchange rate, they would look foolish and perhaps open themselves to another law suit if they called it a foreign currency exchange fee but that's what they used to call it....it's a near criminal act as they provide me no service for doing it.

Of course, I'm not stupid enough to pay this fee to a rip off outfit like Citibank, I do all my foreign credit card transaction with the only truly fair bank Capital One which doesn't pull any of this garbage on its customers.

Yea, I could do that with Capital One too, and I would have saved maybe a hundred dollars in the past couple of years on my foreign purchases. But then I wouldn't be sitting here with a $7000 ticket for travel this summer either. Thanks, I'll stick with the latter. Go ahead and call me stupid some more, because I don't do things your way. It won't bother me as I'm sitting in my first class seat to New York, then my business class seat to Madrid, then another business class seat to Rome, then my business class seat home from Paris -- all which essentially cost me a total of maybe $100, figuring it your way.

And yes I could just use my Citibank for US purchases and get a Capital One for Europe, and I wouldn't have lost that many miles, but I'm not complaining, so I'm not sure why it should bother you.

"it's a near criminal act as they provide me no service for doing it."

So you're taking up my offer of paying my bills in Europe for me and just letting me know my exact cost so I can pay you back when I get home? As you say there's no service being provided, so it would sure be easy and won't cost you anything to do it.

Your idea of "no service being provided" and mine are vastly different.

Nobody called you stupid....you are using the cc to accumulate miles and that's the price you're willing to pay and that's fine and your right and your business...you're willing to pay the 2% for miles...tht's your trade off and that sure doesn't make you stupid...but it doesn't make the 2% fee any less nearly criminal.

And your analogy is absurd to say the least.

"Of course, I'm not stupid enough to pay this fee to a rip off outfit like Citibank,"

Sorry. Since this statement of yours immediately followed my statement that I use Citibank, I assumed it was an attempt to say I am stupid.

Which of my analogies is absurd? The one about someone else providing me the same service for free, or the one about the oil companies adding on their "nearly criminal" percentages?

...the former!

And I really didn't have the slightest intention of calling you stupid...I was referring only to myself when I said I'm not stupid enough...forgive me.

Don't worry about card fees... Why not a concern about hotel rates? Rooms use to be less than $100, now they are over $200! Same room, same services - maybe less. Today the USA dollar is falling in value. Shortly its conversion value to Pounds or Euros will be much lower; I guess more than 3% lower. Think oil! Same oil, USA gasoline now at $3 up from $1. 3% or 300%?

...and you know the best way to correct that...

Reissue the currency and make one new USD worth 10 old USD...countries have done that when the values of their currencies no longer buy what once they did...

Think of the advantages...gasoline would return to 1969 levels of 30¢/gallon....white castle hamburgers would be 8¢ each....a bottle of soda would be 13¢...a meal in Lawry's in Beverly Hills would be $2.80...a modest house would cost $16,500...

Everything would be the way it's supposed to be....

This kind of fee are 2 years old in France with the VISA system.
Explanation was an homogeneisation of the european rules...
Since 2 years as neither my bank, neither the interbank CC system have sent me a modification of the contract of my gold visa, every year I claim for the reimboursement of these additional fees and obtain them...
I think they will this year send me a new contract...
It's an additional fee and the change rate used by the CC company, if you compare it with the one published in the
newspapers is always in favour of...the banks...
American Express for us-europeans- did
not charge till now those additional fees and my bank did't charge an additional fee when my monthly amex count is debt from my bank account.
In France we are on a really credit card system...
So, I don't know if it's the same for US citizens...
Solution for French is to use the Amex when traveling in US...
(NB : several banks take also these fees when you purchase in the euro system... So the homogeneisation normally due to the use of an unique currency is not the rule...).
Erik.

I did read somewhere that in some of the euro countries, the banks do charge a "foreign charge fee" even though no foreign currency was used..namely a French person charging something in Italy...it doesn't seem to matter the currency in both countries is the euro.

But the eu is becoming very powerful in terms of legislation from what I read and trying to homogonize the whole eu...I would wager that in the near future osme sort of legislation will be introduced to prohibit that just like there is legislation in the works within the eu to prohibit the asininely high intra European international roaming rates with mobile phones! Every so often legislative bodies actually do something toprotect their citizens but not often enough.

Just returned from Denmark where hotels and restaurants added 3-4% to the bill if we proposed using a "foreign" (i.e. non-Danish) credit card. They were upfront about it, but we didn't appreciate it. Were we supposed to have the equivalent of $1000 in Danish kroner currency after a four-day stay? Their fee of course would be in addition to our own credit card's transaction fees!

That sounds like yet another credit card rip-off. The merchant's bank pays the full amount of the charge (less discount points) in his native currency. I don't see how the nationality of the card issuer changes that equation.

I think what's happening is that they're forcing buyers to use cash so they can avoid the points (doing which is a blatant violation of their Merchant Agreement).

It's probably a violation of their agreement with the credit card company to surcharge one class of transactions namely those done with a foreign credit card. Their bank does not charge them for use of a foreign credit card; the charges are all processed the same way whether from a foreign or domestic card issuer.

I would write to visa and resport these slime balls for what they are pulling.

Current link to the credit card companies and their "foreign transaction fees"

http://www.emediawire.com/releases/2006/3/emw362004.htm

Capital One is my credit card of choice, but my credit limit is low.
I asked for an increase, but I received a letter from some anonymous person saying in effect, "You cannot ask for an increase. We will decide if you deserve one."

Anybody know a way to bargain for a higher limit. I would use the card more if the limit was higher.

I have 4 times the Capital One limit with 3 other cards. They, unfortunately, all charge the extra 3%.

Does the AAA Visa card continue to charge 1%? I have not used mine outside of the US in over a year.

Now that MBNA is really Bank of America, I wonder about it.

I called AAA and asked, and got a vague answer. I decided the person I was talking with had no idea what I meant.

In my most recent AAA magazine, they note that the foreign transaction fee for the credit card is still 1%. So MBNA hasn't increased this card yet.

Dear Bob:
On the CapitalOne website, in the FAQ, it states:
10. How can I get my credit limit increased?
To request a credit limit increase, please call our Customer Relations department at 1-800-955-7070. Options are now available to do this quickly and easily through our automated phone system.

You need to try again. If denied, ask for the reasons. Maybe they don't want to extend more credit due to the amount of credit already extended via the other cards you mentioned.

For Travel Nut

The response from Capital One is the same as it was the last time I tried.
No automatic increases in credit limit.
CO will review my account and decide whether or not I am entitled to an increase.

Perhaps I have not used the card enough,

An increase in gasoline prices from $1 to $3 is a 200% increase. Though I'm not sure why $1 was used as the starting point over some other figure.

The credit cards companies check your credit report and decide whether to increase based on all your other debts and available credit including house and car debt (credit rating). If you have 3 cards with high limits, then close one or get your limits lowered on those cards.