Credit card Question
 

I will be travelling to Italy next month-I called citibank to see what the charges/if any would be for purchases made. <BR>They told me that I would not incur any additional charges. - I always pay my bill in full so i do not have to pay interest.<BR>BUT-i have read on this forum that there would be an additional 2% tacked onto the bill for services. <BR>Is this true even if I pay my bill in full?<BR>Please help-should i apply for an MBNA?

Yes, Sue. I use Citibank and I have called numerous times to get the facts straight. I finally talked to "a supervisor" who informed me that yes there is always a 2% conversion fee for any transaction in foreign currency. You are totally unaware of it on your statement -- it just shows a Euro amount (or pounds, or whatever) and then the dollar amount, but the extra 2% is already in there. It is still a better rate than you can get exchanging cash, but it is a definite charge. And it has nothing to do with paying your bill, it is added on at the time of the transaction in a foreign currency.

Sue: The 2% is not an additional charge. Citibank must have misunderstood your question (hopefuly not deliberately). The 2% is tacked onto the exchange rate. You don't see it unless you compare the going exchange rate on the day the purchase was made with the dollars that are billed to you. Visa and Mastercard both add 1%, and then Citibank (as well as many others) then add on an additional 2%. I would say to estimate how much you will charge in Italy, and possibly other future international trips if you go often, and see if taking a 2% hit on the exchange rates would warrant the trouble of getting another credit card.

I will be going for 2 weeks and plan to use my card for hotel/meals. I will probably put an estimated $6000 on it. <BR>Is it worth it to apply for another card?

Sue. When you make a purchase on a MasterCard or Visa, you automatically are passed on at least a 1% service charge to use that card internationally. The way the service charge is collected is by giving you a little less rate when the exchange is calculated. So if you are paying a certain amount for an item in a foreign currency when the cost is converted to US Dollars, you will actually pay 1% more for the item. So if you bought an item in Italy for 100 Euros and charged it, and the exchange rate was 10% at the time of purchase, you may only receive 9% exchange rate by the time your bill in dollars arrives. By giving you a little less in the exchange they collect the built in surcharge. <BR>This is about the only way I know how to explain it. All MasterCard and Visa cards, no matter what the logo (Amex, Citibank, First USA) do this.<BR>In addition, some cards also add another surcharge and it works the same way. So you would get an even less rate of exchange rate when your bill arrrives. Just contact your credit cards and ask how much of a percentage they charge when you use your card out of the country.<BR>Hope this helps.<BR><BR>

sue<BR>others can weigh in here, but I can't think of any banking institution that will give the average retail consumer the "prime rate" when it comes to foreign exchange rates. I mean, the rate that is posted in newspapers every day is the official bank rate, but it's never actually the rate that you and I get when we buy foreign currency or exchange money or charge purchases.<BR>I don't know whether the 2% additional charge is low or high compared to other banks, or if some banks just adjust their exchange rate but don't call it an additional fee. Some banks are also charging additional tranaction fees for debit card withdrawals from atms overseas, even from atms that are part of the same network.

2% of $6000 is $120. I guess you'll have to decide if it's worth having another credit card to save $120.

I don't know why this topic is so hard for people to deal with.<BR><BR>MC/Visa each have a clearing house for charges that are not on the same bank as the merchant's. Say you buy something for ?100 in Italy. The Italian merchant deposits it with his or her bank, gets paid whatever (there is a commission to the merchant) and he is out of it. The Italian bank seeing the charge is not on oe of its accounts sends the charge off to the MC or Visa clearing house and gets reimbursed its ?100 and is now out of the loop.<BR><BR>The clearing house seeing the charge is in Euros drawn on an account in US dollars converts the charge to US dollars. This is where the currency conversion takes place. To the person who posted, yes indeed they use the interbank rate to make that exchange which is the best rate available. Since the rate has been about 88 cents, we'll use that for purposes of this example. The ?100 charge is converted to US$88. At this point, the clearing house adds on a 1% currency conversion charges which would be $.88. The charge, now $88.88, is sent through the clearing house to your bank.<BR><BR>Your bank receives the $88.88 charge. If the bank is one of those criminal banks such as Citibank, Chase, Providian, First USA or Bank of America among others, they now impose an additional 2% charge which would be $1.76 so the charge is now $90.64. If you are using one of these criminal banks, you are paying that extra $1.76.<BR><BR>The big banks that don't charge this rip off charge are MBNA and Capital One. If it were me, I wouldn't throw away $120 the way some know nothings are suggesting you do. <BR><BR>Call MBNA (you can get their number of their web site MBNA.com). Tell them you are unfortunate enough to have a Citibank credit card and wish to get their credit card for a foreign trip where you will be spending $6,000. I am sure they will be able to expedite the processing of your applicaton and get you a no-fee no foreign surcharge card before you leave. <BR><BR>But do remember, you will be paying the 1% currency conversion charge of Visa or MC; a totally justified charge as they make the conversion.

Sue, I used Citibank Visa last year in Paris and Germany but have not seen an extra charge for the privilege of doing so. The exchange rate is always so excellent that perhaps I haven't noticed the price is a bit higher than it should have been. In fact, the prices I've ended up paying are always considerably lower than I expected. I've had Citibank for many years and have always found them to be extremely accomodating. Nonetheless, if they want to keep this spendthrift as a customer, they will need to lower their rates across the board. It doesn't hurt to shop around for your best deal, especially if you're talking big spending.

Ay, Shanna, there's the rub. You never see the added 2%, but in comparing the rates for my Citibank purchases vs. MBNA purchases posted the same date, the 2% was definitely added on. Frankly, they just snuck this in on us without fanfare. But I think CCs are beginning to realize that it matters, for my last solicitation from Capital One touted in big print that it had no fee for foreign exchange.

That's right, I have a Citibank VISA and there is def. an extra 2 pct fee. So, you pay a total of about 3 pct of bank rate, but most any way you'll pay something, so that really isn't too bad. I have never charged that kind of money on vacation, though, and I do have another MC (Capital One) that I did get for foreign currency purchases plus I get FF miles. I probably wouldn't do it (get another card) just for that trip if you are happy with Citibank as it is not good for your credit rating to have too much credit or credit inquiries. If you plan a lot of purchases abroad, maybe it's a good idea. I do like Citibank's services very much,which is why I keep them. I've been a long-time customer and they have resolved any problem right away (like bad charges, consumer problems). It's simply a fee, a percent of what you charge, that's the easiest way to explain it -- 2 pct of what you charge in foreign currency. If you buy something that ends up being US$100 cost, you'll pay $2 for that purchase. It is in the exchange rate, not itemized, but at least Citibank itemized the original foreign currency charge and the resulting US$, Capital One hides the original amount which I really don't like. I called MBNA and talked to them and their customer service stinks and they were idiots (plus they harrass you with marketing phone calls) so I wouldn't get them no matter what. Think big picture, long term IMO

I have an advantage account with Bank of America. Last year in July, we did not pay a 2% charge on our withdrawals. I use the ATM and generally pay in Lira, now Euro's for everything<BR><BR>

I just got an offer for a United frequent flyer card with FirstUSA that said fees for "purchase of foreign currency and travelers checks from other than a bank" are 3% of the amount of each purchase or check, but not less than $5 nor more than $50." Does that mean they are now charging 3%? Or that on a $10 purchase I would be charged a fee of $5? It seems incredible--I'll have to check.

Sue: what it means is that if you are buying currency or traveler's checks (from other than a bank), NOT other goods and services, the surcharge will be imposed.<BR>in general, the banks you slam offer, AFTER those surcharges, better exchange rates than you could obtain on your own. consequently, if you sought to buy your own euros at the best price available to you and pay cash for your purchases abroad, you'd lose, since the retail price you pay for euros is much higher than your bank's wholesale price plus its surcharge (2%...). you folks can sleep better now.