Credit card surcharges on exchange rates

Old Sep 28th, 1999, 08:24 AM
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Credit card surcharges on exchange rates

I understand that many credit card companies are now charging "surcharges" on the exchange rates for transactions charged in Europe. Citibank, for instance just confirmed that they charge an additional 2% on the exchange rate in addition to the customary 1% charged by the local bank in Italy. Two years ago, this did not seem to be the case.

Has anyone been seeing these new charges? Any suggestions for banks/credit card companies which do not charge these outrageous fees?
Old Sep 28th, 1999, 08:34 AM
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Hi Tim,
Yes, isn't that outrageous. My husband and I have been checking with our credit card companies. It seems that both of his which are through large VISA companies are charging the extra 2% whereas my cards which are through my credit union and local bank are not charging these extra fees. If you don't have an account with a smaller bank, maybe you should think about getting one. They often offer lower fees.
Old Sep 28th, 1999, 09:11 AM
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I have a VISA with this additional 2% while a MC that do not. But I do not count on anything to be permanent. Depending on competitive environment, the remaining can switch the term for the worst in an instant, so you need to be willing to switch between cards. I had better luck with affinity cards with an organization with good negotiating power. The term differ considerably even with same issuer.

I have studied the actual exchange rate I got vs official exchange rate during our trip this summer. This is outside observers view of what is going on. The bankers in this forum can probably shed better light on this subject.

1. 1% basic exchange commission is probably impossible to avoid. I noted that the exchange rate I GOT was just around 1% plus minus few tenth of a percent most of the time on CC or ATM card that charges only this 1%.

2. 2% additional charge is levied by quite many CC issuers. I refused to use them during this trip. I hope there are still cards left without this 2% charge next time we will be there.

3. However, one merchant in Germany rather wanted to accept VISA over MC citing MC charges more than the VISA. I insisted they take MC since I would have gotten hit with the 2% charge.

4. I also noted that the CC exchange rate varied more than the ATM exchange rate from the official exchange rate. Also, I got worse exchange rate on CC transaction on the days dollar was falling rapidly against the foreign currency (more than 2% hit one day.)

This is my guess on what happens. You all know that the posting time of CC is always later than the transaction time. Whether this or the fact that the CC companies probably wait until some later time when they can bulk convert currencies, the CC exchange seem to take place much later than the ATM exchange. So when the dollar is falling rapidly, the CC exchange takes place later time when the dollar worse less.

There is not much gain per transaction, but over the whole trip there were enough gains to worth playing these rather simple currency games, once you know the rules.
Old Sep 28th, 1999, 09:13 AM
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I was lucky. My Nations Bank ATM Debit/Credit card did not charge me any conversion fees at all. I used it everywhere while in France this past May. My other card, MC, was going to charge me 2%.
Old Sep 28th, 1999, 07:42 PM
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You just have to phone your credit card providers in advance and ask for the current policy regarding international transactions. Some have surcharges, some do not. And, the rates vary. You could inform them that, given the surcharge, you plan to use an alternate card, not that the person handling your inquiry cares or will make note of this. I'm guessing there may be a mass return to traveler's checks. In the meantime, you can just shop for providers who have not yet added surcharges to foreign transactions. Even so, you have to check continuously. I, personally, think it's outrageous that they're dreaming up charges. However, I have noticed the ATM withdrawal fees for "foreign" (meaning not your bank) going down. They used to be anywhere from $1.50 to $3.00 in our area and lately they're $.75 or a $1 at most. Note that debit cards are different and you must inquire about them as well...
Old Sep 28th, 1999, 08:35 PM
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I avoid all this BS by opening a savings account at my credit union, putting in it what I expect I will need on the ground, they give me a debit card for zippo or maybe $5, I make cash withdrawals in the local currency on Cirrus/Plus systems most everywhere, I avoid CC interest and fees, and I get the bank rate on money exchanges--i.e., no commission, no rip-off, no fees, nada. Only problem encountered so far was in Turkey where it is hard to find ATMs that will honor anything but CCs, or they honor debit cards but yield only small amounts. I carry a cash advance credit card only for emergencies, not for routine. Anyone know whether Europe's ATMs reject debit cards?

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