jsmith says, "If you don't understand it, blame the lawyers or take a course in remedial English."

I've made my choice. Which will the rest of you choose?

Have a World MBNA MC. I have received no change in terms re: foreign purchases. The CC are legally required to disclose any changes they make to your account in writing.

Do remember a couple of things...

1. As of now MBNA has apparently not sent out any notices outlining changes in foreign currency charges. They may well be forthcoming but none have come out, to the best of my knowledge, yet.

2. Buried in all these notices is a statement from visa that they will no longer be charging 1% but rather at a rate chosen from the rates available to them; just what that means who the hell knows.

3. Several of the banks, notably Chase, have indicated that not only will they charge 3% for currency conversion but they intend to charge 3% on all foreign transactions even if written up in US dollars. So the banks are dropping this pretense that this charge is for foreign currency conversions, it is simply a class of transactions i.e transactions outside the US that they are surcharging. Of course, they have no greater costs for foreign transactions but what banker ever missed an opportunity to zap it to his customers.

4. The British Airways thing I am familiar with as I have had that card. When this current wave of adding 2% to foreign transactions started, Bank One whose subsidiary was First USA exempted this card from the foreign transactions perhaps at the insistance of British Airways who certainly would be interested in seeing its customers were not subjected to this charge. About a year and a half ago, Bank One did notify customers with a change of terms that it would be instituting the 2% charge on this one hold out card claiming they had to have a degree of uniformity. Obviously British Airways decided it was futile to resist this.

Now Bank One has been bought out by Chase and soon all Bank One cards will be issued by Chase. Chase is one of the realy renegade banks that not only is charging 3% above whatever visa charges but is doing it on all foreign charges even if written up in US dollars.

It's only going to get worse.

Where are our lawmakers when we need them to stop this zapping of the public...oh yeah I forgot, they contribute millions to various congresspeople. Guess that has nothing to do with the fear of these people to do anything to reign in the banks, now do you.

My most recent MBNA statement had no leaflet included with regard to foreign transactions. No leaflet at all. An international transaction with FNAC was posted on 3/20 at the usual 99% of that day's exchange rate.

I'm saving a small international purchase for after April 1st to see what happens...

A few months ago, when reporting our travel dates, the rep with whom I spoke said, "yup, we're probably the only ones left without a fee for international currency conversions".

The agreement included with my Chase card does specifically address foreign transactions.

If, indeed, MBNA adds a percentage, I'll investigate further using my MasterMoney card issued by my local bank.

Since I believe that "charging" any percentage whatsoever to "foreign" or "foreign currency" transactions is positively ridiculous, I will endeavor to determine whether using my debit card, or pre-paying the hotel room with a wire transfer, may be more beneficial.

Just to add to the mix... I did receive my notice about 2 weeks ago that the AmericanAirlines Citibank card..."for each purchase made in foreign currency, we add an additional charge of 3% of the amount of the purchase after its conversion into USD."

I called twice. Two different answers. One said yes, the other no.
So who the heck knows?

Next question: how will you actually know what fee has been charged on your statement?

Will they split out the fees AND tell you the exchange rate, or will you have to try to back-calculate from the statement to your original receipt?

Cassandra, you raise a very good point. I was suspicious myself and did some checking several times to see if I could figure out just what I was being charged. I concluded that I was being charged the wholesale bank rate of exchange plus 1% as advertised.

I did the computations based on my actual bank withdrawals with an ATM card, credit sales receipts, and charge slips so I had the actual foreign currency data in front of me.

The statement I got on my credit card bill gave only the US dollar amount. The amount of the foreign purchase in local currency was NOT listed. So without my own credit receipts, I would have been helpless.

With foreign denominated transactions in hand, I then looked up the exchange rate for that day at one of several places on the WWW that provides daily data on exchange rates.

The first time I did it, several currencies were involved: French francs, German marks, Swiss francs, Italian lira, and Canadian dollars.

All rates I obtained were from WWW sourses and they were based on the bank wholesale exchange rate. One source was with a Canadian bank; one source was a foreign trade intitute that was not affiliated with a bank to my knowedge.

I applied the daily rate to my charges, plus the add-on of 1%. Although I could approximate very closely what I was atually chrged, I never could duplicate the exact amount. I tried the high rate for the day, the low rate, the average rate, the opening rate, and the closing rate. None of them pinpointed the actual exchange rate, although I was usually accurate to the 3rd decimal place.

I never paid the day's highest rate, nor did I ever benefit from the day's lowest rate. It was was always somewhere between the two extremes.


Being curious about how the exact rate of exchange was selected from the daily stream of continual currency fluctions, I emailed Visa and MasterCard and asked each the same question: "How is the exact daily conversion rate for a given credit card conversion selected."

The first reply from MasterCard was in essense, "Go away. We will not tell you."

Visa's initial answer was in nonsensical gobbledegook. I persisted with my question.

When I did, I eventually got back an answer that said in very blunt terms: We will not reveal what we do.

The bottom line in both cases was "Shut up and go away."

So much for disclosure and customer relations. We need them; not vice versa.

You see..that's the point.

The 2 credit card companies lost a class action suit regarding disclosure of these fees, and fees they are. The lawyers will make millions, us peasants will get 34 cents each or something like that.

So now they are disclosing, if you call what visa says disclosing namely they will select among the rates is available to them. Citibank is calling it a finance charge.

Remember what garbage these banks pulled and are still pulling. When the US Supreme Court ruled that it is the state where the credit card operation is located not the state of residence that controls the amount of finance charges, states like South Dakota and Delaware, not giving a kahoots about the public but rather about big business, passed laws in essence giving banks the right to charge whatever they wanted. State usury laws went by the books...and the banks moved their cc operations to Delaware and South Dakota so they could charge whatever they want.

So the banks can charge whatever they want and because Congress refuses to do anything to slow their power, indeed look at the new bankruptcy law and see who makes out like the bandis they are, well this is the result.

The key on this will be travelers reporting back on travels that occur after April 1. Post April 1 transactions will tell the tale of this "misappropriations" of our funds.

BTW, I have a credit card through my credit union that uses the Visa 1% only, no add on fees!

xyz123

You bring up a very good point on the new bankruptcy law. It was the banks, credit unions and retailer lobby groups who poured millions into the effort to tighten the bankruptcy laws. Yet another example who really runs the country - the PAC's. This is very much an anti consumer law. I'm not advocating bankruptcy but 98% of the people who file are no asset filings. They have nothing to give. Around half file to a major medical emergency. Only 2% are the types who spend as if there is no tomorrow with no intention of paying.

19% of the people who file for bankruptcy are college students. The credit card companies give out cards to people who can't pay and then go crying to Congress because of their stupidity. They give credit cards to dead people and dogs. My sister received a credit card 3 years after her passing. I'm not surprised this bill succeeded. Congress dances to the tune of money.

Too bad we can't circumvent this and use a foreign address to apply for a Visa or MC in the country we want to visit.
The only good thing to come of this (or bad in Mr 12's opinion) is that I am now amassing all sorts of credit cards for use from MC for rental car, Visa for air miles,USAA for % fees, another atm, MBNA (just in case) and Amazon visa (a must have deal on that new travel purse!)

Okay, a tiny bit of an exaggeration but still, this is insane!!! Cash it shall be.

In my latest brochure from my bank there is a paragraph entitled currency conversion. In that, they explain that Mastercard or Visa will convert the charge into a dollar amount using either a government-mandated rate, or the wholesale rate in effect one day prior to the processing date, increased by one percent.

What could be clearer?

Now, exchange rates change virtually every time there is a trade, and the careful reader will have observed that you need to find the wholesale rate from the date prior to the trade. If you know the date of the processing (which can vary from the date of the sale), you can look up the wholesale rate from the prior day, add one percent, and know what charge Visa or Mastercard will present to your card issuer.

Note that there is some room for Visa and Mastercard to increase (or decrease) their profit by timing the actual exchange. I don't begrudge them that, as any effective currency trader does that, and they do provide us a valuable service at relatively low cost.

Of course, who's to say that they won't change this sometime.

Whether your card issuer adds on a percentage or a fee is what varies. The trick is to find a card issuer that does not add its own fees or percentages, and give them your business.

ATM cards work substantially the same.

While some people have reported that credit unions do not add a fee, I think that is an oversimplification. Some do, some don't, just as some banks do, and some don't.

I need to call and double-check with my credit union for its current policy, but last June there were no fees added on my statement for purchases I'd made in Europe. It's a Visa card issued by BellCo, which is a fantastic credit union all-around.

Maureen, are you sure? Those add-ons do not normally appear as extra line items. Unless you confirmed the actual currency exchange rate on the day of your charge, and the final amount, there is no way to know if anything was added or not.

Patrick, you're right. I just called and double-checked both with Visa and with BellCo. Visa does add its inescapable 1% fee to international purchases, but BellCo adds no fee on top of that. I guess that might be the best any card will offer.

Just to add yet more information to this post, and maybe a tip for Nutella --

I also talked to MBNA today on some other things about my AAA Visa card, so brought this question up. I wasn't aware at first it was an MBNA employee, I thought I was talking to AAA, but apparently since MBNA manages their card, all calls are really to MBNA.

I don't think it matters too much who the money goes to, but the first guy claimed the total 3 pct charge on forieng transactions was ALL from MBNA, not Visa, even though 1 pct used to be from Visa. I think this was just a matter of semantics in that they are now going to itemize the 3 pct addon charge on the bill (the Visa+MBNA amt) and before they didn't itemize anything, the 1 pct VISA charge was in the purchase amount.

I really let the guy know my opinion of this charge, and he kept trying to justify it by a bunch of nonsense. I don't know if they are all just liars there or they have been brainwashed to believe this is a legitimate charge. Basically, he said interest rates were going up and with the Federal Reserve rates it was getting too hard for MBNA to make a profit, so they had to raise revenue somehow (gag), and almost all other cards did this so it was an industry standard to which they were "conforming". What a line. However, the logic that really irritated me was that he said since costs were up and they had to get revenue, it was better to get it from foreign transactions as they didn't affect a lot of people so only some people paid for it, and it was better than raising the interest rates slightly over everyone.

Now how stupid are you to give that reasoning to a customer asking you about this who clearly cares about it and does a lot of foreign travel? I am supposed to subsidize other people in debt if MBNA wants more profits? I'd much prefer they raise interest rates, as I always pay my bill off each month.

Now, after all that, and I started quizzing him on whether this was AAA's idea or if MBNA was forcing AAA to do this since they handle the card -- he checked his list and said there are some affinity groups they manage who are exempt from this increase and won't be getting it.

He checked, and AAA Visa is exempt and so fees won't be raised on AAA MBNA Visa cards. He also said notices would be going out soon for other cards, and it was to go into effect for many of them in May.

I know this needs keeping an eye on as perhaps they can force AAA to do it as part of their service agreement or when they negotiate a new one, but right now it's a group they aren't raising. You'd think a finance group like Motley Fool would also be one they would think might notice this more than others and get exempted.

so, Nutella, maybe use your AAA Visa if you have one, instead. It's a good card, I like the perks.

Christina,
Certain affinity groups may be exempt from the current increase, but that exemption probably won't last long. I had an older Marriott Visa issued by First USA which later became part of Bank One. At first my card was exempt from Bank One's foreign conversion fees which applied to new cardholders. However, that only lasted a year or so before they sent me a notice stating that they would be applying the conversion fee to my card as well.

Christina, thanks so much! After reading your post, I just dug out my AAA Visa - I must have received it in the mail months ago if not longer and it still had the security sticker on it - and I was still able to activate it by phone. (I'm hoping the actual card works though, I'll try it locally before I travel with it).
Even if the AAA card gets fees eventually, I'll still be good using it for my upcoming trip!

In the good old days my Visa statement used to show the transaction amount in local currency, the conversion rate, and then the total charge in dollars. When that stopped I called to ask why (and sent a message via the internet, too) and was told "we aren't doing that any more." So much for full disclosure.