I know there have been a lot of posts in the past about the extra 3% that most credit card companies charge for foreign transactions. Because I value my FF miles from my Citibank AAdvantage Card, I've always just decided not to worry about those charges. But upon my return this summer I started doing some comparing of my bank statements (ATM withdrawals) from Bank of America, and my Citibank Master Card charge slips.<BR><BR>I was very surprised to see that there was very little difference -- less than 1% difference in the actual charges. I mainly used Bank of America affiliated banks in Europe (BNP in France) for example so there are no charges either end for my ATM withdrawals.<BR><BR>For example. On September 30 I withdrew 300 Euro on my ATM card. The actual cost was $299.05, which makes sense as on that date the Euro and dollar were virtually equal. But on that same date, I charged 104.50 Euro on my Citibank card. That showed up as an actual cost of $104.65. I could list numerous other examples from identical dates, but the results are usually the same -- less than one percent difference of the total exchange rates between the ATM transactions and the charge card transactions. Does this mean that if Citibank is adding 3% for the transaction, they are using a different exchange rate from that of my bank -- obviously a better one?

We used BNP Paribas' ATM's also as it's affiliated with B of A; however, B of A advised that there's a $3 fee per transaction. But that to me is worth it over buying traveler's checks and losing on the exchange.

Huh? I'm confused. We specifically used BNP Pariba's because I called the national office for Bank of America and was told that there was NO charge for using an ATM there. This makes sense as my bank statement clearly shows the itemized charges for ATM use overseas. In Italy, Slovenia, and other countries where I used unaffiliated banks for ATM withdrawals, there was either a $1.25 or a $1.50 charge, but on the BNP ones there was never a charge. I also had a $1.50 charge for withdrawing at a different bank in France when I couldn't find a BNP.<BR>By the way, the same &quot;no charge&quot; policy was true between BofA and Barclay's in the UK.

The added charge is 2%. Visa or MC charges 1%, both ATM and credit.<BR>I think you are comparing Fuji Apples to MacIntosh in this case because the exchange rate fluctates daily. Sometimes it is in your favor and sometimes it is not. Unless you knew the exchange rate at the time the transaction was posted, you cannot really compare. <BR><BR>I tried to find from Visa how the exchange rate was determined. The response I got was polite but the essence of it was: (1) We are not going to tell you, and (2) Go Away.<BR>

Bob, I didn't realize that there was also the 1% exchange charge on ATM's, so I guess there should only be the 2% difference. But I assume that if I compare the ATM transactions that are recorded on an exact same date as a credit card charge (actual posting date) that I AM comparing apples to apples. <BR><BR>Yes, I got a similar response from Citibank, or else no one was willing to tell me what exact exchange rate they use. That's why I decided to do a date by date analysis of the two statements when I returned this year. <BR><BR>I guess my main point is that if the charges really aren't any different -- or as in my case less than a 1/2% difference on a particular day of withdrawing cash or charging, then it certainly makes sense to charge -- and not worry about charges for using a credit card that apparently didn't exist or were nullified by the difference in the way they figure the final transaction.

<BR><BR>Unless the fees for credit card purchases and ATM withdrawals are exhorbitant (and in my case I don't feel they are), those fees are worth it to me for the convenience of not having to deal with traveler's checks.

This is an interesting set of facts you both are posting. Do either of you know if I use my Citibank ATM in France which bank might not charge me for using the ATM (there are Citibank's in Paris but I'm wondering about Credit Lyonnas or BNP Paribas or SocGen). Any info. appreciated. Thanks!

Set of facts? It's clear that Patrick has committed the cardinal sin of actually giving some facts. Every other post on this forum is much closer to what we really admire here: &quot;I heard somewhere&quot; or &quot;somebody told me&quot;.<BR><BR>Cynically yours,<BR><BR>An admirer of Patrick<BR>

Patrick,<BR>Since you gave specific facts I can guess what might have happened.<BR><BR>On Sept 30, 300EU at pure exchange rate of about 1.0123 (historical closing number) should have been $296.35. Paying $299.05 for this means 1% as we always know what PLUS/CIRRUS charges for this service.<BR><BR>The 104.50EU, on the other hand is more involved. It was probably not exchanged on 9/30, but few days later when the charge was actually posted. Assuming two days later on 10/2 when the exchange rate was 1.016. Then the pure charge was about $102.85. You paying $104.65 means about 2.7% = 1% + 1.7%which still shows Citibank charging 2% additional profit.

I think Patrick is making a good point. When I travel, I use my ATM card and my Citibank AAdvantage card for cash and charging respectively. I find this to be the most convenient system. (My bank does not charge me for ATM withdrawals.)<BR><BR>When I get home I usually look at what the exchange rate was on the cash transactions and on the charges, just out of curiosity. The credit card charges are so close in exchange rate to the ATM rate that whatever percent they are adding is invisible to me. It isn't any more noticeable than the normal daily fluctuations in the exchange rate. And I find both the credit card rate and the ATM rate to be quite good, compared to the rate of exchange for cash or TC's.<BR><BR>So I can understand if you are annoyed at the credit card company tacking on a surcharge, but it's just not worth it to inconvenience yourself. You might as well check the rates every morning to decide whether today is the best day to change your money, or wait til tomorrow when the rate might be a few hundredths of a cent better. <BR><BR>Of course it is your choice, but my feeling is that if you can afford the trip, you don't need to worry about the tiny amount of money we are discussing here. After all, if you charged $5000 on a trip (that would be a LOT for me!), an extra 1% would be all of $50.<BR><BR>Getting the mileage is certainly worth it to me.

PS After reading Greg's post, perhaps the real question should be &quot;How can you get a better rate than what your credit card gives you?&quot; Because the &quot;pure&quot; rate, Greg, as listed in the newspaper, is not available to any of us. I think changing money or TC's is far worse, i.e., there is a much higher surcharge built in to the rate.

Greg, your post makes sense, I think, but I can't get the math to come out right. It seems to me that the &quot;pure charge&quot; of $102.85 plus 2.7% would be something like $105.63, not the $104.65 it actually was. I still seem off a good 1%. What am I figuring wrong? (And I used to be so good at math!)<BR><BR>But the major issue with your statement is that I have both the actual credit card slip and the statement. The charge was made on September 30 and was posted on that same day, not several days later. So the actual transaction dates for the ATM and the credit card were identical. I have a number of others like this as well. Of course, some postings are delayed for several days, and I'm not comparing those.

Hi Patrick and others: <BR>The exchange rates used to make credit card and ATM card conversions are based on the whole sale bank rate of exchange. Also, you might make the transactions on the same date, but the posting times might be different. As near as I can tell, the posting time determines the conversion exchange rate -- somehow<BR><BR>However, finding out the exact exchange rate used to make a specific conversion to US dollars is a lot like guessing the ingredients of the &quot;mystery soup&quot; we sometimes ate in the Air Force. It could have about anything in it!! <BR><BR>Specifically I asked both Visa and MC this question: Which specific exchange rate out of the daily stream do you use to make conversions from foreign currencies to US dollars? MC's answer was much more blunt than Visa. Its spokesman said without much ado &quot;Get Lost!&quot; Visa at least wrote me a lot of verbiage that did not answer the question. When I pressed Visa, its public relations man said he would not tell me.<BR><BR>I know from watching daily fluctuations in currency exchange rates that the exact figures shift constantly just like the stock market indices.<BR><BR>So I asked, which rate do you use to make the conversion? Is it the high rate for the day? An average rate?<BR>An exponentially smoothed rate based on highs and lows? Or some other rate?<BR><BR>After a July trip to Canada, I tried to figure it all out, but only added to the mystery soup. I took my receipts from all of my ATM withdrawals, and every charge receipt and compared each one with what I was actually charge in US dollars. <BR><BR>I then looked up the daily exchange rates for each day of each transaction I had made. Part of the problem was that a transaction made on a weekend posed something of a problem. Was it converted with a Friday rate or a Monday rate??<BR><BR>In all cases, after adding 1% for the Visa fee, I concluded that I was charged less than the highest rate for the day, but more than the lowest rate. None of the different daily rates, with or without an add-on of 1%, enabled me to convert precisely from Canadian dollars to US dollars. However, adding 1% to the Canadian dollar figure before conversion got me a little closer to the exact amount., The difference was in the 3rd decimal place, so I was less than 1% off. I don't think rounding errors explained the discrepancies because I was using rates with 4 decimal. Because I was coming out better than the high rate for the posting date (high rate defined as the rate most unfavorable rate to me), I decided to heck with it.<BR>At least I was not being cheated.<BR><BR>This year after we got back from a month in Europe, I did not even look at the rates. I just verified that all of the charges on my statement were ones I had made. Then I paid the bill and forgot about it.<BR> <BR>I agree, that traveler's checks will get you clipped pretty good. And converting currency is just as bad, if not worse. I cannot beat the combination of the convenience of an ATM card and the exchange rate it involves. <BR><BR>I know some folks think I am a little fanatical on the this subject. Not really, I major in economics and history and have done research in international trade. So looking at exchange rates is an old habit. We deal in such small amounts of money that various exchange rates make only a little difference in our net worth, but for a major corporation that does millions of ? in trade, a 3% exchange rate swing means a lot of money -- 30,000 ?

More interesting comments. Thank you, Bob Brown.<BR>I only brought this whole issue up, because this summer I did a lot more ATM withdrawals and paying in cash, thinking I was probably saving 3% on most things. Like Marilyn, those FF miles are important to me and I've never minded a little extra to get them. But when I travel in Europe for three months (or even 5 as I did a couple of years ago) it is a WHOLE lot more than $ 5000 of total charges. After comparing all my ATM and credit card statements this summer, however, I'll definitely go back to using the credit card even more -- I really couldn't find any noticeable difference in cost, like I thought I would. And yes, I agree too, no traveler's checks. ATMs and credit cards are the way to go.<BR><BR>The cloudiness of trying to figure out what rate a bank or credit card company uses has made me also quesion those charge cards that don't add any extra fees. I wonder if they are using the same exchange rate or a different one as the banks which do charge a fee? I don't suppose it would ever be possible to find out for sure. Somehow they remind me of those old days of cash conversion booths at airports -- when that was the only logical way to get foreign cash before the days of ATM machines -- some with a fee and others with big signs saying &quot;no fee&quot;. Often the no fee ones used such a different exchange rate that it was much better to pay a fee and still come out ahead.<BR><BR>In any case, I'm even happier about all the extra FF miles I got this summer from those charges -- extra fee for credit card or not. I've already booked my free flights to Europe for next summer.

It would be easy to figure out, Patrick, if you really wanted to -- just charge two items on the same date, one with a card without the foreign currency exchange fee and one with it. I have two different cards, a Citibank VISA with the 3 pct charge and a Capitol One MC with only the 1 pct charge, so I could do that. Unliked yours, I know my Citibank does charge 3 pct, it's just their basic card, not a AA or anyone else as the issuer. <BR><BR>Actually, I did use both in London in August because all MC networks were down one day, so I had to use my VISA for theater tickets. But I know I couldn't have used my MC the same day, but perhaps a day close by--I'll check my receipts if I can remember to, but don't suppose that would work if it can vary that much within a few days.

Hi again. For the record, my credit card is issued by MBNA through AAA. Because my US dollar costs of charges and ATM transactions in Canada this past July were within range I decided that I was not paying more than 1% at any time over the bank wholesale rate. <BR><BR>For my trial conversions, I obtained historical rates from a national bank in Toronto. The fluctuations in the computed exchange rate ((US dollars / Canadian dollars)+1%) were so limited that if the basic rate was not derived from the daily wholesale rate, it was very close.<BR><BR>In years past, before Bank of America started their 2% extra trick, I had no reason to suspect that I was not benefitting from the wholesale rate.<BR><BR>The worst drubbing I took was in Switzerland when I exchanged paper money. We discovered too late that we still had about 50 ff in bills stashed away in a coat pocket. I converted them at a bank window and shut my eyes.<BR><BR>The best way to exchange is to find someone from Euroland who has a fistful of euros and wants dollars!!<BR>You can use the wholesale rate and both of you profit. I did just that in August before leaving for Europe.<BR>

But if you had on the cash advance fee for credit card use, the exchange rate does not look so glamorous. I used the Capital One card in September in Spain and for 200E ended up with an additional $15 fee. M.

Ah, Marilyn, that was the big mistake. NEVER, NEVER do a cash advance on a credit card. Not only will there be a big fee, but they will charge you interest from the day you &quot;borrow&quot; the money, unlike a charge you make where they give you until your next billing cycle to pay, interest free. I once advised friends who don't travel much to use their ATM card to get cash, and they mistakenly spent their entire vacation taking cash advances on their credit card -- cost them a small fortune.<BR><BR>And Bob, according to the &quot;historical figures&quot; provided above by Greg, I was only paying up to 1.7% above those figures for charging on a Citibank charge card, so I feel OK about that too.

Sticking your credit card in an ATM machine is similar to sticking your finger in an electrical wall socket.<BR>You usually get shocked.<BR><BR>Does City Bank say it charges the extra 2%? I am interested in how you computed the 1.7%. <BR><BR>Comparing credit card costs without precise baseline data is a tricky business. As I said, I never could recapture a rate based on my receipts and bank statement that matched what the bank said the exchange rate was that day.<BR><BR>And without knowing precisely which rate Visa or MC used to make the conversion, all we can do is make some educated estimates, and try to decide if we are being taken advantage of.<BR><BR>That is one reason I don't put my credit card in a slot where I have to turn loose of it!! I know I will be charged interest at about a 21% annual rate. <BR><BR>A friend of mine, college professor no less, fussed at me because he said using his credit card as I suggested cost him 15%.<BR>He was using it to get cash. It turned out that did not know the difference between an ATM card, a debit (check card) and a cash advance!!<BR>He had one piece of plastic and used it for all purposes. Well, you can do that, if you don't mind paying for it.<BR>

I'm beginning to regret I ever started this post -- the math is getting to be a bit too much for me, but to answer how I got my figures, Bob, look at Greg's post above. <BR><BR>According to Greg, the &quot;historical closing figure&quot; for September 30 was 1.0123. Using that figure for the amount I withdrew on an ATM that date and was posted to my account on that same date, the amount I was charged made perfect sense just as he figured it there. But on that exact same day I charged 104.50 Euros and it cost me on my credit card statement (yes it posted that exact same day) $104.65. Using the exact same formula, I actually find that it cost me a total of 1.4% (I messed up the figures when I said 1.7%). In other words, the charges were less than a half percent different on the very same day. Greg was mistaken in saying that perhaps it posted several days later when the rate was better -- the transaction is clearly shown on my statement as posting on September 30. <BR><BR>Yes, Citibank did tell me that they add the extra 2% to the 1% charge. But if they did on that date, they must have started with a much better rate than the historical closing date shows, or the rate that Bank of America used for their figuring. This was not an isolated example. I have a number of exact dates when I can compare the costs of the posting of a credit card transaction and the closing of an ATM transaction and the results are always virtually the same as this one -- certainly never an extra 2% difference for the credit card one.<BR><BR>Please note, I'm not complaining here. I'm thrilled that I can't find how Citibank is charging me much of anything extra for using the credit card.