According to David Lazarus of the SF Chronicle (SFGate.com), Visa is adding a 1% fee to any charges made overseas beginning April 2005. This includes charges that have already been converted to US$. So this change is coming directly from VISA. Some banks are apparently tacking on an extra fee on top of VISA's for overseas charges charged in $ too.
MC is not planning this change (yet).

Sorry, forgot to add, this new charge is for card use in Europe, Africa, and the Middle East. I guess everywhere else is exempt. Wonder why?

Thanks for the valuable info. I guess I'll plan on using my AmEx whenever possible instead of my VISA.

Check what AMEX is charging - mine is 2.5% over the interbank rate, and Americans seem to report typical rates of 2% over the interbank rate for AMEX.

WillTravel is right. AmExp's foreign charges are still higher (mine is about 2.5%) but they don't surcharge for US$ charges made on foreign purchases.

VISA's currency conversion charge is still only 1%. (You do have to add on any additional fees your issuing bank may have too.) The new change is VISA will now add 1% to US$ charges made overseas as well as any that it actually has to convert from other currencies to US$.

The article is in response as much to Hertz' decision to introduce dynamic currency conversion as was described here in another thread.

However, and it is a big however, the article makes it very clear that you have the right to opt out of dynamic currency conversion which you should always do no matter what the merchant says.

But make sure when signing the rental contract with Hertz that you specify the billing must be done in local currency.

It sounds as if the credit card issuers want to recapture the spread that they were losing to dynamic currency conversion. While I understand the mischief that has attended it in many situations, dynamic currency conversion isn't an inherently bad concept. The idea of charging a fee for something that has already been converted to U.S. dollars is an absolute sham.

In the purest sense, dynamic currency conversion might not be a bad thing provided you knew what rate was being used and provided the rate was no more than 1% above interbank rates.....my experience has been that it is something like 5 or 6% above interbank rates, far worse than you could do with any of the cc's not pulling the 2% (soon to be 3%) scam and worse than those credit card banks that do....

Of course, do you think for one second, that merchants are providing this for the benefit of their customers as they try to convince the customers when pressuring them to accept the charge in their currency?

I read the article and I don't think there are any situations where Visa will charge you 2%. The Lazarus article says "RATHER than than charging a 1 % fee to handle currency conversions for overseas purchases, as it does now, the company will tack on a 1 % charge ANY time its plastic is used abroad"

Car rentals seem the be the big issue. I always rent with AutoEurope & pay the entire bill up-front in dollars. AutoEurope is a US company with only offices in Portland Maine, so there will be no Visa add-ons.

If a Hertz merchant in Europe charges your card in dollars, then Visa would add the 1%. It is my understanding that Visa prehaps trades euro/dollars cheaper than anyone, so requesting Hertz to charge you in Euros is probably the best way to go.

I use my brokerage debit card in Europe, so there are no card issuer add-ons (usually 2%) by the card issuer.

So for people renting a Hertz car in Euros in Europe, there is only the 1% Visa add-on & the exchange rate will probably be the best possible if they use a card like I use.

Is this your understanding also ????

Stu Dudley

It was my understanding up to 02 April...

Visa has very slyly dropped the previous idea that they use the interbank rate and add on 1%; rather the language has become much more unclear something to the effect visa will choose among the rates available to it...I don't really know what's going on...Citibank now says they are adding 3% but it this an increase? It was 2% with visa adding 1%; some say it is no change and there is still a total addition of 3% but 3% above what rate???????

This is an issue that obviously require government regulation but I wouldn't hold my breath that any congressperson has enough gumption to try to take on the banks which contribute mucho dollars to those who do their bidding.