I got a very big surprise today when my husband's credit card statement included a finance charge for foreign transactions. It's a recent "policy change" (sounds like a complete and utter SCAM to me though) and they now charge 3% for all foreign transactions! Just for the priviledge of using their card! It makes the benefits of using a CC overseas (great exchange rate, etc.) nonexistant. I just can't believe it. Fortunately, we used my CC for most of the purchases on our short overseas trip, and they do not have any kind of 3% ridiculous fee. I'm so glad we know since we have a month-long trip coming up soon.

I looked at a few other bank's cards and found that Citibank, Bank of America and BankOne all have the 3% fee in their terms and conditions, sometimes very buried. My MBNA card does not charge this fee.
It's worthwhile to check this!!

This is the US forum, but OK . . .

So, did you compare the exchange rates on your card vs. his? If your exchange rate is higher, but doesn't include the 3% fee, then it's no better.

And why is it a scam when a business charges you to use their services? Since when are they supposed to provide things for free?

Truly, this is just a policy change on reporting. They used to just roll all the fees into setting their exchange rate. Now they tell you that 3% of it is a fee instead of hiding it in a higher rate. Nothing to scream about . . .

Forgot to say - But this, like many other areas of life, could benefit from comparison shopping. If you can find a card that has lower exchange rates, all fees included, give them your business. Just like anything else, bank rates and fees are market driven, so if you don't patronize those that charge more, they'll feel compelled to lower their rates. Unless of course other people feel that they give better service and it's therefore worth paying the higher fees.

A scam would imply you were somehow duped or that the credit card company never disclosed their fee.

I believe a more accurate statement is that you likely ignored the terms change announcement they sent to you or never read the cardmember agreement when you first received the card.

As the previous poster mentioned, those that have no fee or a lower fee might simply bury the charge some other way through the exchange rate they use.

It certainly pays to check the rate that your credit card charges for this service - as they do vary. But this is not a scam - it;s simply a fee for the service you are using.

And in any case - it's still much better than the 10% or so - often plus a fee - that you would pay if you tried to change cash or Trav checks into the foreign currency.

As with everyting else - caveat emptor - the smart consumer gets the deals.

Just another example of the too-often reckless use of the word "scam" on the forum.

Is it a separate line item for each transaction on the statement or just lumped together as a monthly total? This could make it tough for expense report accounting and I think it would be foolish to deter business travellers on expense accounts from using their (the bank) card.

Not that anyone cares, but they also charge the US merchant extra for corporate cards, foreign cards, having to hand-key the transaction, etc. Any little deviation from a "normal" transaction costs the merchant more.

As for reading the cardmember agreement (or the merchant agreement for that matter) you'd have to be a brain surgeon to understand it all...Ryan do you really read them - or like the rest of us, wait until there's a problem/question, then go hunting?

Well, pb, let me say thanks for alerting us.

No, it's not a scam, but it is a trademark of the CC industry, which I consider one step above legalized prostitution. (My apologies to all the legal prostitutes out there.)

CC companies are famous for slipping in charges, fees and terms that most people overlook until they get hit.

Yeah, yeah, we're all supposed to read every line of agreement. We're also supposed to eat right and get more exercise, too.

Thanks again for the warning, pb.

I could be mistaken, but I think that MBNA just started charging this fee, as well.

I have noticed in the disclosure statement that most of my credit cards charge anywhere from 1 to 3% for a foreign transaction fee. I always call and check the latest info for all my credit cards and choose the lowest rate card to take with me.

In my case it has always been MBNA that has had the lowest foreign tranaction fee, but as I stated I THINK they are also going with the 3% now. It seems I read that somewhere on the European forum, but I'm sure someone can confirm or correct that.

It's always best to call your credit card companies and confirm all fees that you will be charged when using your cards overseas for either purchases or cash advances.

For my husband's card it was lumped together as a monthly fee.

The FIRST thing I did was check the exchange rates used on my no-3%-fee card and his. I had the same or slightly better actually. So my card simply didn't have that fee in it, hidden or in as a separate item.

I can't believe how many people are defending CC companies!

To me, this is a BIG policy change since they added 3% to the cost of things you buy from foreign merchants! But they just slipped it in with their usual terms and conditions updates. Do you really read those??

I was simply SHOCKED when I saw this going on. I have a monthlong overseas trip coming up and might've paid hundreds in fees just because I used one CC rather than another.

I just got back from Italy this week.

I called my CC company before leaving and asked about conversion charges...which were high..but certainly not a scam.

Instead of charging and paying the added conversion fee....I just hit the ATMs.
ATm offered a better rate and only a $1.50 charge ( my banks charge)

I even paid my hotel in Euros from the ATM

Dick, I was going to say the same thing. I simply hit the ATM's and pay cash for everything. I feel that I come out much farther ahead going that route, but that's just my opinion.

Of course I don't like the fact that the credit card companies add the fees, but it is their prerogative after all. I can choose to either use the card or not use the card.

Yes, I read most of the updated terms of agreement when I recieve them only because I have had too many surprises in the past when I don't. It's been a lesson learned for me personally.

I'm not defending or condeming the credit card companies or those who use them and pay the fees. It's just a matter of preference in what we are willing to pay, or not pay.

Saying that this isn't a scam is not the same as "defending" the CC companies. They run a business, and they charge a fee. They even tell you about the fee in writing. That's not a scam, no matter how you cut it.

I did, actually, get an updated service agreement (or whatever you want to call it) when my CC changed their fee structure for foreign transactions, and it was very obvious what it was and what was changing. If you didn't read it, then you'll be surprised later, but it was easy enough to read and to know to read it, since it was sent as a separate notice.

And as I said before, if you know of a CC that gives you better rates/fees, feel free to use them and not the other! Vote with your dollars, so to speak. Credit cards can charge what they want (this is a free market society after all). If the fees are large enough that people think them out of line, they won't get the business and will adjust accordingly.

And I, too, know that ATM is usually the cheapest way to get money. A little research before an overseas trip should be done by anyone and most of this would be obvious.

BTW - I think it's great that you posted a warning to help others who also might be unaware. What I have a problem with is your saying that it's a scam and implying that the CC companies shouldn't be allowed to do it.

An Update - I spoke with my CC and they said that the 3% fees are coming from MC and Visa, not the individual banks. So while my card currently doesn't have the fee, it will be coming at some point.

I've always relied on my CC for foreign travel. I use ATMs for cash of course but I don't like to carry large quantities of cash around in general, plus daily limits make paying solely in cash sometimes impractical.

This is why it is always a good idea when leaving the country to call and speak to a representative of your credit card companies. And the best time to do this is before you leave.

I have a Captiol One Visa account that I was going to cancel, until the raised the limit quite substantially. I then charged tickets for the Alhambra and discovered they charge only 1% in foreign fees. It wasn't that bad.

And, no, this isn't a scam. The credit card companies are up front about what fees they charge. It is up to the consumer to do a little research (and calling a couple of 800 numbers) to find out the information they need to know.

The currency conversion fees are not new, but until recently the banks have not disclosed them. The fees were hidden.
They are only disclosing the fees now because they were forced to.
VISA has been adding a 1% conversion fee for years.
Many banks have been tacking on an additional 2% for years.
Go to the Europe board and do a search for 'currency conversion." This has been a hot topic for the past few months.
Heres one thread to get you started.

http://www.fodors.com/forums/threads...2&tid=34607494

And here's another recent one.

http://fodors.com/forums/threadselec...2&tid=34608119

Haven't read all the replies but this has become the norm for all credit cards except perhaps credit unions. It isn't really a "scam"--it is the cost of doing business. And for many cards it has ALWAYS been there--just not broken out for perusal.