MBNA foreign fee confusion
 

I have read here and other places (USAtoday) that MBNA is planning to add 3% to all foreign conversions beginning May 25th. I have also read here that several MBNA-sponsored cards will not be adding on extra fees, at least for now.

I have a MBNA Worldpoints card and have gone through the literature sent with the bills carefully and seen no new fee disclosures. Does this mean that Worldpoints is exempt from the increase? Anyone heard otherwise?

I just called MBNA, and the representative claimed that it was Visa and MasterCard that were adding the 3%. I told him that I doubted it, and that if I found out otherwise, they would be losing my business while I was traveling abroad.

I have the Motley Fool Visa, issued by MBNA. A couple days ago I received a notice of changes to the agreement, one of which was the 3% fee being added to foreign transactions. It's clearly being added by MBNA, not Visa. I'm not sure if the MF card will be exempt from this new fee, but because I received the notice I'm assuming it won't be. Needless to say, I'll be looking for a new card to use overseas, and maybe domestically as well - any recommendations?

After all the talk on here about this problem, I decided to discontinue using my Citibank AAdvantage card overseas (they are definitely raising the fee!).
I called AAA and they assured me that they do not and are not planning to add anything to the 1% Visa already charges - so I applied for and got that card (it's issued by MBNA). We'll see, and I'm leaving next week for France.
Actually, I'm not really sure HOW to tell when the statement comes. I guess you would have to know the exact exchange rate on the date you made the purchase. Can anyone clue me in how to tell what their percentage conversion really was - on the statement?

However, with the recent class action suits for non-disclosure, I think these credit card companies will disclose this before actually changing their policy and fees. Citibank certainly did.
This confusion mostly seems to be with MBNA, with different policies for different cards.

Sue4, if your statement doesn't list the exchange rate, the only way I know of to tell what exchange rate was used is to keep track of the cost in Euros so you can compare it to the cost in dollars, and then divide one by the other. You can then compare that rate to the historical interbank exchange rate for that date using the currency converter at www.oanda.com.

Luckily, the card I've been using recently does display the exact exchange rate used, to several decimal places. (This is President's Choice MasterCard - for Canadians.)

Does anyone have any idea if this is true with American Express?

We are leaving in three weeks and I am SO confused! Our current plan is to take some cash, use a debit card to get more cash, and Am Ex for purchases (dinners, tours, souveniers).

Amex has a 2% charge, so it is lower than most VISA/MC, since all VISA/MC have a 1% fee from VISA/MC, and most issuers add an additional 2%. MBNA (which I have) and Capital One don't (or at least, didn't in the past!). I'll be checking with MBNA and cancelling my card if they are starting to add this bogus fee as well.

Anne

Our credit card company confirmed that the conversion fee is 3%. It was recommended to us by a European relative to take US dollar travelers' checks. (the exchange rate for euro travelers checks by our US bank was far worse than the current exchange rate in most European banks, so we'll do our exchanging there)

Historically, Amex has charged 2% conversion rate for purchases made in foreign currency. All Visa and Mastercards had a 1% currency conversion fee, with some card issuers adding 1-2% additional. Up until early April, most people here found that cards from MBNA, Capital One, and USAA did not add fees over and above the Visa/MC International 1%. That is apparently changing with some cards, and it will be very important to read every disclosure that comes with your card statements.

I think it is confusing because of all the different things you read in various media. I have an MBNA AAA Visa and they are not adding the extra fee to that card. It still has the one pct from Visa it always did, of course. Because they are not adding it (for now, knock on wood) to some of their cards, I suspect it must be from MBNA, not from Visa. I didn't think it was adding on 3 pct, either, but adding on 2 pct as 1 pct was always on there from Visa or MC. If it were Visa, everyone with a Visa card regardless of issuer would have the fee, and I think we've read on here from other companies (mainly credit unions, I guess), who don't have it.

The only way to tell about your card is to call up MBNA and ask them about your specific card. It sounds like you have an MBNA card sponsored by MBNA (I don't know what worldpoints means), so I suspect it would have the extra fee since MBNA is the one who decided to add the charge. But, I do think you would have to be notified, maybe you just haven't gotten it yet -- or maybe you won't. I'd call if I were you.

Although you never can tell what people will tell you on the phone. I have spoken to a couple customer service reps at MBNA and gotten two different stories, and one said how they all were so confused there at MBNA. However, they certainly admitted to me it was MBNA adding the fee, they never claimed otherwise. They specifically gave me some story about how they were doing it to be the same as other cards, to justify it.

The first guy at MBNA I spoke to had some story about how it was changing to coming from MBNA and nothing was coming from Visa anymore, but the end result was the same. I think this is something they can't explain very well and don't understand themselves, but I suspect (not sure), all they mean by that is you didn't used to see it on the bill when it was the one pct Visa fee but since it is their added fee, they are going to itemize it on the bill.

Sandy, I'm really confused. Are you saying that you will take US $ traveler's checks to use, cash, or spend in Europe? If so, do you really think that won't cost you a whole lot more than the 3% from a credit card? While some European banks may have a decent exchange rate, won't they mainly charge you a fee in that case for cashing TC's?

I think the confusion about 2-3% is that Visa/MC are now passing the fee on to the issuer, whose responsibility it is to report it. (passing the buck so to speak) So that Citibank is not raising their fee, but simply telling you about it again since now they have to put it on the statement. They are still charging you 2% over and above the Visa/MC 1%.

It seems indeed that there are some MBNA sponsored cards that are exempt from their new 2% fee, which won't start till May. My NEA and Christina's AAA cards are two of them. I charged a couple of things in April and got a good rate on them according to Oanda. (Visa held on to them for two days and the rate went down instead of up!) We'll see what happens in May.

Well, PATRICK, back when those pesky "currency conversion fees" were first introduced, I discovered that when going to Paris, for example, I could acquire AAA AmExp traveler's checks in the foreign demonination (for 99% of the interbank rate) and cash them at the AmExp office, or any post office, with no charges/fees, for cash. On one visit, we were even able to cash them at the front desk of our hotel (for the face value, with no fees/charges).

Since I've just received a "notice" from MBNA, I will check with AAA forthwith regarding the exchange rate for travelers checks. Then, I will check with recent visitors to Paris with regard to cashing them once there.

I, for one, plan to diligently check out the most economical options, before determining that the extra 3% is something I will have to endure.

There is no question but that MC/Visa, your provider have figured out a way to grab megabucks from you for absolutely nothing.

To my knowledge, and I have sure have not received any notice to indicate anything to contrary, USAA Visa and USAA MasterCard is not charging these extra fees. And you do not have to be a member of USAA Insurance to acquire their credit cards. Good credit of course is a must.

I've read that MBNA is the largest issuer of credit cards, in large part because they offer affiliation cards: i.e., if you get a NASCAR card, or an OSU alumnicard, your card is coming from MBNA, and they will handle the processing. Each affiliated group has a contract, and one cannot abrogate a contract mid-term.

So I think MBNA has made a decision to increase their fees (and I think the increase may be 2%; the mastercard/visa cartel has decided to rename their conversion fee a finance charge and apply it to purchases made in Euro, or made overseas in dollars and impose it on the card issuer, rather than the consumer, so I think the 3% fee is a combination of the old 1% visa fee and an extra charge imposed by MBNA).

In any event, unless competitive pressures (such as all of us cancelling any MBNA card) force a change in this decision, I would anticipate that the higher fees will be imposed on the various affiliation group members when that group's contract is up for renewal.

I don't mind paying for services, and I know that there are huge expenses involved in building and maintaining a world-wide currency delivery service, not to mention maintaining the phone banks we are all calling about this, but I think they have gone too far now. The merchant pays a healthy commission to visa/mastercard/whoever for the privilege of selling us something, and of course that cost is included in what we pay. The banks make unbelievable amounts from those of us who do not pay off our cards completely every month (and the number of people in that category is huge), and now they want to add an additional fee onto our end of the transaction.

My father had heart disease and needed a transplant. His doctor told him he was lucky, they had two donor hearts available that matched him, one from a high school athlete who had been killed in a car accident, the other from a retired banker. My father chose the one from the banker, because he wanted one that had never been used.

TCs are hardly an alternative to a credit card since most stores and restaurants in Europe will not accept them. Moreover, American Express offices are not found in every town. The alternative is to use cash withdrawn from an ATM.

I just received notice that my British Airways Visa (Chase) will be charging the 3% for foriegn transactions. I will be using my new Visa from a local credit union on foriegn transactions from now on.

well, coincidentally, I just received in the mail yesterday a notice about changes in terms for my MBNA AAA Visa card. I read the section on foreign transactions, afraid they had misled me about my card not being raised -- and, luckily, the percentage was listed as only one percent total for my card (on top of that VISA exchange rate thing being either a whole rate or some govt-mandated rate). The change to the terms on my card is that this one pct will be itemized as a foreign transaction fee whereas it used to not be visible.

There were several other changes in APRs and due dates, none of which affect me as I don't carry balances -- however, I can say that if you get this notice you will surely be aware of it, as I didn't know how obvious it was. It's a separate mailing in its own envelope labeled something about changes in terms, it's not just a slip in with your regular bill. So, you can't miss it. I just got mine and it did refer to the 5/25/05 date for the changes, so I imagine some people haven't received it yet.

I agree with you, Clevelandbrown, that this may be a mid-contract term issue and things could change in the future, so I'll keep an eye out (BTW I am an OSU alumna, also).

MBNA needs to educate its customer service reps about this issue. I called several weeks ago and was told that my Texas A&M MBNA master card would be subject to the 3% of fees in April...

Then I called back last week (never received the notice about being subject to the fees), and was told that they are doing it in "waves". My card was not marked for the April, May, or June "wave" of becoming subject to the fees...

?????

I requested a cardholder agreement be sent to me immediately so we will see.

I just got my notice from MBNA and will shred my card before leaving on my trip. I have replaced it with a credit union card.

Unfortunately, Michael, I don't think that the credit card company cares that you shread your card. For that matter, they wont mind if any of us do that either.
It is bad enough that the dollar is doing so poorly. Its just adding insult to injury for those credit card companies to rob us another 2%.

SoeurAnneLafleur--Maybe and maybe not. Mine was obtained through Working Assets, and I let Working Assets know that it is cheaper for me to contribute to causes by writing a check than by using their credit card. They might care, and I am waiting for their reply; REI did not, claiming that members had other advantages that offset the 3% fee.

I hope that it works out for you, Michael. There has to be a way around it.

I called my credit card companies today and got the following info:
Capital One Visa - 1% Visa surcharge. They don't add any more.
MBNA Visa - 1% Visa surcharge + 2% MBNA surcharge.
Amex - 2% surcharge.

I also have a MBNA World Points card and I know the current foreign conversion fee is 2.5%. I have'nt recieved any ammendments from MBNA as of yet.

I too have an uncoming trip to Europe (end of May) and after reading this thread called MBNA 5 times (and no, I am not obsessive compulsive). I got the exact same answer each time, having made sure I got different people on the phone. My LLBean MBNA Visa is and will be still only 1%, but some Master Cards, and perhaps some other Visas are going up in May.
It is still the least expensive credit card, especially with my lower interest rate, with American Express at 2% with outrageous interest coming second. My United Visa is horrendous, and I will not use it in Europe. For ATM Euro cash, the least expensive is to fill a checking account in advance of the trip and use the check/debit card to get money-the fees vary, but there are no interest charges.

LOL humanone!
I totally understand - I have called several times over the past month and I keep getting different answers.
Happy to hear you at least got some consistency!!

Quick point - only one poster mentioned asking to be sent a copy of the cardholder agreement. Several folks mentioned the considerable variability in answers when talking to different phone agents. Please note that no matter what a phone agent tells you, it is the written agreement that matters - i.e., if you get a statement that has unexpected charges and call to complain, the comp;laint wilbe resolved according to what written terms were in place, not what someone said on the phone. If you are concerned, ask that a copy of the terms be sent to you.

Well humanone, I also have a LLBean Visa card and just called them. The rep advised me that the foreign currency conversion rate was 3% and that I had recently been sent a notice to that effect with the effective date being 5/25. I had previously called re: an MBNA affinity MasterCard and was told the charge was 3% as well.
OY!

so there you go -- Mara is number 6 with a different answer on the LLBean Visa card. I think you have to be careful as it's possible they just told you the current situation and don't know about what's going to happen next month. I know I got two diff. answers and one guy said they don't have any access to information on what it's going to be in the future.

I wouldn't have called to check so much if I knew how obvious this notice and changes were going to be, as I said. Given how many changes they made at this time, even without any increase in that foreign transaction fee, I'd guess you'd have to be getting that mailing for some kind of change. If you haven't gotten any one at all, I'd still wait to see it in writing.

Instead of calling back MBNA several times, though, after I got two diff. answers, what I did was call AAA customer service finance dept. as they were the ones who cared about having me as a customer. They called me back and verified AAA was not having this increase.

Ironically, we just received our MBNA notice yesterday with the good news (LOL)of increased late fees, higher default rates, possible suspension of the grace period and the 3% conversion fee. I called my other credit card companies and found the following:
ATT Universal MC--3%
US Bank Worldperks Visa--3%
Capital One Visa--1% (hoo hoo!)
Discover--No fee (Don't get too exited: you can't use it outside of the states)

I have the MBNA WorldPoints card,and I just received a new cardholder agreement, that states all transactions in a foreign country are subject to a new 3% fee.

Thanks Lovejoy. Haven't got my notice yet but it must be coming soon. Drat! Time to get a new card.

USAA FSB Mastercard is the way to go. Get their ATM card too, as they reimburse you for other banks' ATM fees. Also USAA MCard gives you 31 days auto CDW instead of MCards usual 15

Go to USAA.com to get info and telephone numbers, then call - takes very little time as they have intelligent humans answering their phones. You do not need a US military connection to use USAA

Received the latest cardholder agreement for my Texas A&M Platinum MBNA Master Card over the weekend. We scoured it and there is NO mention WHATSOEVER of any foreign currency fees or foreign transaction fees. This is consistent with what I was told the last time I called.

So... it appears that what I was told over the phone may be true. They appear to be "phasing" in the fees in "waves". Obviously, my Texas A&M MBNA Master Card is not in the first few waves. Some posters have reported that their MBNA World Points cards are being assessed the fees (or will soon be assessed the fees), so obviously that particular card is in one of the first waves.

My guess is that **most** MBNA cards will have the fee within the next 6-12 months.

I have some MBNA cards (three, in fact) that I hardly ever use, but do like to keep for backups in case something should happen to my Capital One card.

Here's what I just found out when I called:

As of May 25 Fidelity MBNA Worldpoints will be charging a total 3% currency conversion fee fee -- 1% MC and 2% from MBNA.

BankNorth MBNA Worldpoints MC is already charging this 3% fee. (Perhaps this discrepancy is related to the "wave" implementation mentioned above.)

My NEA MBNA card is not charging any conversion fee in addition to the 1% from MC.

Don't know whether the wave hasn't hit NEA yet, or perhaps organizations like NEA and AAA are not looking to take that cut from their members, at least as of now.

So for now, Cap One is the only card I know of that gives you travel points and doesn't charge that extra currency conversion fee. (Their standard Miles card does have a $19 annual fee, however.)

Use a Target Visa if you have one - they only charge a total of 1%. I know this for sure because I've already booked a lot of tours, bought museum passes, London Eye tickets, etc. and the conversion fee is just as they said - 1%.

Forget our Diamond Preferred card and our Platinum cards - they charge 3%!!

I got the gobbledegook insert in the mail from MBNA concerning new amendments to the credit card agreement concerning late fees, payment due dates, and foreign currency transactions.

I was not positive I understood what all the mishmash said, so I called for clarification, and verification.

First I was told the conversion rate was 3%. I told them to cancel my card.
Then after a hasty huddle, I heard that the rate was 1%. After I heard that I asked, "What is the 1% based on?"
Duhh.

I read the statement to the associate who took my call and said, "Now. Tell me what this really means."

Well, after more huddling, she decided that it meant the conversion cost would be listed as a line item on the statement. I would see the foreign currency amount, the amount of the conversion fee, and the converted amount in US dollars.

I still am very dubious about all this.

Here is what the statement I received from MBNA just a little while ago said:

There will be a new 1% foreign transaction fee on these types of transactions (Charges out of the US.)
Your statement will list the transactions separately from the foreigh transactin fee. For transactions you make in a foreign currency, the conversion rate will be reduced by one percent compared to the way it was previously determined. (but they don't say how it was previously determined.)

AMENDMENT We are adding the folowing to your Acount Terms Transaction Fee section, Effective for all transactions outside of the United States or if a foreign currency, that post to your account after May 25, 2005 we will assess a transaction fee (FINANCE CHARGE) equal to 1% of the US dollar amount of each such foreigh transation. This fee will be in addition to other applicable transaction fees. (NO defintion of "other fees".)

We are replacing ... with the following:

If you make a transaction in a foreign currency, the transaction will be converted by Visa International or Master Card International depending on which card you use, into US dollars in accordance with the operating regulations or conversion procedures in effect at the time the transaction is processed. Currently these regulations and procedures provide that the currency convesion rate to be used is either (1) a wholesale market rate or (2)a government-mandated rate in effect one day prior to the processing date. The currency convestion rate in effect on the processing date may differ from the rate in effect on the transaction date or posting date.

It sounds like I get charged 1% of something, but there are so many undefined terms that who knows.

One example would have cleared the whole thing up. Instead, MBNA just keeps babling and refuses to give me an actual example of how the foreign currency conversion will be put into actual practice.

For example, lets assume that at the time the transaction is calculated, the exchange is €1 = $1.30.
Or €.76923 = $1.00
I make a €100 purchase on credit. Does my credit card statement show a final $ amount of $131.31? And $1.31 will be posted separately as a finance charge?

That is the way I read it.

Now, somebody analyze my gobbledegook.

The way I read it, under the prior system, your 100 euro charge would have been increased by Visa or Mastercard from $130 to $131.30, which would have been shown as the exchange rate on your statement.

Under the new system, your 100 euro charge will show up on your statement as $130, to which there would be added the finance charge of $1.30, for a total of #131.30.

Previously the 1% charge by Visa or Mastercard (actually, I think in some instances it varies slightly from 1%) was billed to you, the cardholder, by Mastercard or Visa, but not specifically shown on the statement. Under the new system, the 1% charge is billed by Visa or Mastercard to the bank (the card issuer) and then passed on to you by the card issuer.

So there is only a technical and inconsequential change in that part of the transaction. Visa and Mastercard are dropping the 1% fee to you, but adding it to the bank which, of course, will pass it on to you. The consequential change is that the 1% fee will also be added to charges made overseas in dollars (the infamous dynamic currency conversion), and that apparently a lot of banks are taking this opportunity to add their own fees, effectively converting our costs from about 1% to possibly a little over 3%, unless we are alert enough to find a card issuer that isn't adding their own fees.

What is different is that MBNA has decided to join the other near criminal banks of adding an additional 2% fee to foreign transactions for providing no service whatsoever as the actual conversion is done by visa/mc.

However, what is confusing is that it is not across the board. MBNA sponsors many cards...apparently they have decided, at least for the time being, not to impose the additional 2% charge on the AAA card. I also have an NHL card and a MLB card with them, I have received no notice yet. Don't now if that means yes the fee is being added or no it's not. They don't list on their web sites which ones yes and which ones no.

Just a total bummer for all of us who have been ripped off on this by other banks for years.