Question
I received notice yesterday that the Mastercard I've been using for years to make purchases abroad will begin imposing a 3% currency conversion fee effective 1 April. Until now, it has only charged the 1% fee imposed by Mastercard, and because I do make a fair amount of non-US dollar charges, I have foregone the miles or points I could earn with an affiliated card and instead used this fee-free card. The math has obviously changed.
I know that Capital One imposes no conversion fee, and AMEX imposes a 2% fee, but are there any hotel- or airline-affiliated cards which don't impose more than the 1% fee that Visa and Mastercard impose? The Capital One doesn't offer "real" miles or points, and I doubt I'd be able to take advantage of the rewards it offers. Any information would be appreciated.
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Merrill+ (https://www.card.ml.com/MLRewardsCenter/View-Cards/MERRILL.htm) Visa issued by MBNA. No annual fee. No foreign currency exchange fees. Reasonable rewards, including 1:1 redemption for British Airways Executive Club miles in 5,000 point increments.
I would not be surprised if they were to add a foreign currency fee, but inasmuch as there is no annual fee it seemsto be low risk to use it in the interim.
dennis
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MBNA's AAA Visa and Pentagon Federal Credit Union's Visa both charge 1%. The later gives a 1.25% rebate on all purchases, neting you a profit. Both are described on the Free Cards Page, Cash Back Cards section of the Credit Cards section of my website below.
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Capital One actually has a cash back card. The offer tends to change quite frequently. What I see now is 1% cash back, 2% on groceries, payable in $25 chunks as a statement credit or check. A good deal if they stick with 0%. Though you then have to deal with Capital One...
Regarding the MBNA cards (Merrill+, AAA), I would guess at the first opportunity possible they will be converted to 3% as BofA is buying MBNA.
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There's one long thread about this over in MilesBuzz. :cool:
I expect you'll find it quite comprehensive if you have the time to read it all! :D
Best card for foreign exchange? (http://www.flyertalk.com/forum/showthread.php?t=401958)
http://www.flyertalk.com/forum/showthread.php?t=401958
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I believe cards serviced for other financial institutions, such as Merrill Lynch, are contractually different than affinity cards and that Merrill decides the terms. Still I cannot see any reason Merrill would choose not to charge a fee if their primary competitors already charge because they are not marketing this as a feature.
Regarding the MBNA cards (Merrill+, AAA), I would guess at the first opportunity possible they will be converted to 3% as BofA is buying MBNA.
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Thanks for the info. pgary, I'd always discounted the Pentagon FCU's Visa on the assumption that I couldn't qualify, but after clicking through on your website, I learned that by paying $20 to join an auxiliary, I could. The things one learns through FlyerTalk ! Too bad the card doesn't earn miles or points, but you're right, the cash back more than makes up for that.
As you noted acf573 , the problem with the Capital One card is that you have to deal with Capital One . . .
jbfield, believe it or not, I did a search for threads dealing with currency conversion fees before posting this question, but obviously I didn't choose the right search terms; I'll try to do better next time. After all, it was the first time I've ever started a thread. :) (And you're right about the length of time it took to scan the other thread.)
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I know this has been beaten to death on other threads but it seems like a very fluid situation with many companies changing terms as of April 1, 2006.
Is the CapitalOne card still the lowest foreign conversion fee at 1%?
If so, can CapitalOne miles/points be converted into BA miles?
The Merrill+ card looked like the winner until another poster said Bank of America was buying them. They will surely impose the 3% fee like they have with all their other acquisitions.
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Capital One is actually at 0%. And yes, that is the lowest. Cap One "miles" are essentially just points that you can apply to purchasing a plane ticket.
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Capital One is actually at 0%. And yes, that is the lowest. Cap One "miles" are essentially just points that you can apply to purchasing a plane ticket.
though they still charge the 1% pass through fee from MC - or at least, that's what they told me on the phone yesterday. I use my local credit union credit card when I travel abroad - 1%, and no rewards - but no games, and the money stays in the local community. I don't travel internationally more than a couple times a year, so I don't lose a lot in rewards.
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I also just use my local credit union's credit card when traveling abroad. No hassles, low conversion fees (1%), no worries. ^
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though they still charge the 1% pass through fee from MC - or at least, that's what they told me on the phone yesterday.
My understanding is that they're at 0% and they eat the 1% (this was also mentioned in an article posted here in the last week). This is somewhat untenable over the long term, but to date, they have not introduced a change (to my knowledge). The guys that previously only had the 1% Visa/MC fee got caught a bit by the change in policy. For instance, my credit union had a period of a bit less than a year where they were at 0% because they didn't have the software set up to tack on 1% for all foreign-originated charges. In contrast, those banks that previously tacked on an extra 2% could pretty easily change their software to do 3%.
That said, I use my Citi PP and Amex SPG when abroad. PP earns ~2%, 3% fee = -1%. Amex SPG I count as ~1.9%, ~2% fee = -0.5% or so after accounting for Amex's less competitive exchange rate. These options are competitive with a no reward, 1% card and don't have to deal with another piece of plastic.
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I recently responded to a Washington Mutual Visa card solicitation that had a 1% international service fee.
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The fact is Visa and Mastercard updated their system to impose an association fee of 1%. All VI & MC cards will have a 1% Foreign Transactions Fee as a result of the "WALMART LAWSUIT SETTLEMENT" Everything Walmart does is good for Walmart and bad for everyone else. Now off of the soapbox. The associations charge 1% as a seperate line item. The banks can add a surcharge to this fee as per their contract. This amount can be from 0% to 5% for doing absolutely nothing. The result is that for a VI or MC you will pay between 1% & 6% for any foreign transactions. I did a little research and this is what I found out. Bank of America cards are all 3%, Chase cards are all 3%, HSBC is 2% eeck, American Express is 2%, Discover is 0% (but only good in North America), Nordstrom is 1%, most credit unions are 1%, Macys is 1%, Juniper Bank is 2%, US Bank is 3%, MBNA is 1% on some and 3% on others but will increase all cards to 3% as of April 2006, Capital One is 1%. I hope this information is of help to you.
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The fact is Visa and Mastercard updated their system to impose an association fee of 1%. All VI & MC cards will have a 1% Foreign Transactions Fee as a result of the "WALMART LAWSUIT SETTLEMENT" Everything Walmart does is good for Walmart and bad for everyone else. Now off of the soapbox. The associations charge 1% as a seperate line item. The banks can add a surcharge to this fee as per their contract. This amount can be from 0% to 5% for doing absolutely nothing. The result is that for a VI or MC you will pay between 1% & 6% for any foreign transactions. I did a little research and this is what I found out. Bank of America cards are all 3%, Chase cards are all 3%, HSBC is 2% eeck, American Express is 2%, Discover is 0% (but only good in North America), Nordstrom is 1%, most credit unions are 1%, Macys is 1%, Juniper Bank is 2%, US Bank is 3%, MBNA is 1% on some and 3% on others but will increase all cards to 3% as of April 2006, Capital One is 1%. I hope this information is of help to you.
And Citibank??????
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The fact is Visa and Mastercard updated their system to impose an association fee of 1%. All VI & MC cards will have a 1% Foreign Transactions Fee as a result of the "WALMART LAWSUIT SETTLEMENT" Everything Walmart does is good for Walmart and bad for everyone else. Now off of the soapbox. The associations charge 1% as a seperate line item.
<snip>
Capital One is 1%.
Are you sure about this? Can you post a link that definitively shows the Walmart settlement (and note, it wasn't just Walmart but thousands of other retailers) caused the 1% foreign transaction fee? Not quite sure I see the connection here. My feeling is that Visa/MC changed from foreign exchange to foreign transaction because they were losing revenue because various merchants (e.g., Hertz) were changing the amounts into USD and bypassing the normal Visa/MC surcharge.
I'm not sure what you mean by a "separate line item" being charged by Visa/MC. Visa/MC no longer charge the consumer the 1% directly (as they used to when they built it into the exchange rate). They now bill the issuer the 1% and the issuer can charge the consumer whatever amount they want. This is why old credit card T&C used to say Visa/MC will tack on 1% and we'll tack on 2%. They now simply say we tack on 3%. This policy change was implemented sometime last year. Many issuers now break out the overall foreign purchase surcharge on a separate line. This is due to a class action lawsuit about the lack of transparency/disclosure related to the foreign exchange surcharges.
And I'm pretty sure Cap One is at 0%. Many people here on FT have posted anecdotal evidence showing that. Bank Rate seems to think the same:
http://www.bankrate.com/brm/news/cc/20050624b1.asp
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Let me report a recent case. I used my citi pp elite on 1/2/06 on a foreign website. The charge was converted to USD at a very good exchange rate. On my monthly statement, there was a SEPARATE foreign transaction fee corresponding to 3% of the transaction amount.
As a comparison, I also used my citi debit card to withdraw cash on a foreign ATM on 1/3/06. No foreign transaction/exchange fee whatsoever, but the exchange rate was 1% lower than that of the credit card.
My guess: If you use a debit card (to get cash at least), MC (or VISA) charges 1% but it is absorbed in the exchange rate; citibank charges nothing. If you use a credit card, citibank charges 2% IN ADDITION TO the 1% billed by MC to the bank, and the bank lists the total 3% separately as it is the financial charge by the bank to the customer.
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This is Citibank:
Transaction Fee for Purchases made in a Foreign Currency 3% of the amount of foreign currency purchase after its conversion into U.S. dollars.
This is Capital One:
Could not find it in the disclosures, so I called and the CSR said 1%.
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See http://www.flyertalk.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange