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I just noticed this term:
Transaction Fee for Purchases made in a Foreign Currency: 3% of the amount of foreign currency purchase after its conversion into U.S. dollars.
Is this a normal procedure for a MasterCard? My MC from Chase always charges me 3% for foreign purchases. Any other cards that do not do this?
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Fees seem to range from 1-3%. I use a Paypal debit card, and 1% is the norm there.
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How about American Express?
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How about American Express?
I cancelled my AMEX card in the late 80's because they charged 2%. I don't know if they're still the same or not. Call up the customer service number and I'm sure they'll tell you.
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I just noticed this term:
Transaction Fee for Purchases made in a Foreign Currency: 3% of the amount of foreign currency purchase after its conversion into U.S. dollars.
Is this a normal procedure for a MasterCard? My MC from Chase always charges me 3% for foreign purchases. Any other cards that do not do this?
This seems to be the custom in the US. I have an European Visa, MC and DC and none of those charge any fee for Foreign Purchases. I think you Americans should not accept this situation. I think the reason for the fee is that most Americans never travel abroad so they don't care.
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I was always telling people to use an MBNA card for foreign transactions, never to use American Express. Now it looks like my MC's and Visas all are charging 3%, and Amex is still at 2%. I'm taking my Amex (even though it is not as widely accepted).
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Now it looks like my MC's and Visas all are charging 3%, and Amex is still at 2%. I'm taking my Amex (even though it is not as widely accepted).
Not so for all cards. MBNA is a mixed bag. Some cards only charge Visa/MC 1% others the full 3%. Capital One Cards only charge Visa/MC 1%.
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This seems to be the custom in the US [3% charge]. I have an European Visa, MC and DC and none of those charge any fee for Foreign Purchases. I think you Americans should not accept this situation. I think the reason for the fee is that most Americans never travel abroad so they don't care.
MBNA is trying 3% on some cards. Says reason is high over seas fraud loss. Suspect tsastor is correct that most Americans do not care. However the volume of complaints here shows that FT Americans do. Since 1% is min and Amex is 2% and points are worh at least 1% I mostly use Amex or get cash with my debit card.
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This seems to be the custom in the US. I have an European Visa, MC and DC and none of those charge any fee for Foreign Purchases. I think you Americans should not accept this situation. I think the reason for the fee is that most Americans never travel abroad so they don't care.
It's simple: American Credit Cards Companies are Greedy. Just look at how much various credit card fees have risen in past 5-6 yrs, not to mention 10 yrs. It's absurd! Credit card companies will continue to increase and create new fees, as long as enough American cardholders put up with it.
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mshaikun - if you notice, I did say that MY mc's and visa's charge 3% now, there may be some out there that don't, but after checking on the cards I have, they charge 3%.
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mshaikun - if you notice, I did say that MY mc's and visa's charge 3% now, there may be some out there that don't, but after checking on the cards I have, they charge 3%.
I noticed. That is why I said
"Not so for all cards. MBNA is a mixed bag."
There are MC's and Visa's that charge less. Even some issued by MBNA. You need to change cards or get separate card for international travel if you travel much internationally .
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citi aadvantage your best bet
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citi aadvantage your best bet
You're kidding right? It gets 3% on foreign transactions. Just got a Capital One Ultra offer based upon 80 points per dollar of ticket price. It only gets 1% of foreign transactions. My $220 US Airways ticket to LGA would be available at anytime for 17,600 points and I'd get miles when I used te ticket.
My Starwood Card gives AA miles. A $20,000 spend = 25,000 miles. beats CITI but as an Amex card it is not taken everywhere. Still it is my favorite card.
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The real question is now much do you charge in a foreign currency when you are out of the USA. 1-3 thousand dollars may add only an extra 10-30 dollars out of your pocket. Is the concern really worth it?
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The real question is now much do you charge in a foreign currency when you are out of the USA. 1-3 thousand dollars may add only an extra 10-30 dollars out of your pocket. Is the concern really worth it?
The problem is that 3% is almost invariably greater than the value of the points, miles, cashback, or other quasi-currency one is getting, so it negates the benefits of using one's card. (This is because the interchange fees charged to merchants are rarely in excess of 3%, so the value of whatever the issuer gives you to keep you as a customer is naturally going to be at least slightly less than that, so they can turn a profit.)
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My USAA Master Card and Charles Schwab VISA (MBNA) cards both charge 1%. The cards charging 3% get to stay home except for one AmEx (just in case).
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Some corrections to what has been posted before:
Visa and MasterCard charge 1% currency conversion fee for foreign currency transactions to all banks and credi unions. This 1% is not bad at all, since they use the interbank exchange rate, which is better than the exchange rate we get when buying foreign currency on any bank or money exchange office (for small transactions). Appart from this 1% conversion fee, the banks could charge additional fees (1% or 2% more), and that is what is actually happening with credit cards like Citi, Chase, Bank of America, etc. They just figure out how to bring more money to their P&L's...
For someone who travels a lot, the best advice I can give is to get a credit card from a credit union or a small bank who only charges the 1% currency conversion fee and use the normal points or miles card for all transactions done in the USA...
Credit Card fees have been increased in the last five years because the US Credit Card business is saturated, so the only way to increase profits is to charge more fees...
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MasterCard does not currently charge 1%, although they may begin to in the autumn. For the next several months, a 0% surcharge issuing bank with a MasterCard-branded card would have 0 (ZERO) markup from the interbank rate.
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I was told by my bank that as of June 2005, VISA now also stops charging 1% foreign transaction fee.
It is the bank that will continue charging the fee, not Visa nor Master Card.
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I was told by my bank that as of June 2005, VISA now also stops charging 1% foreign transaction fee.
It is the bank that will continue charging the fee, not Visa nor Master Card.
That's partially true. Visa/MC no longer build the 1% into the exchange rate. In a move to be more transparent, Visa/MC will bill the issuing bank the 1% and leave it up to them how to collect it from their cardholders. Visa instituted the new change already, MC has removed the 1% and will start charging the banks in November I believe.
So if your bank suddenly starts charging you a 1% fx surcharge, they're really not making any extra money off of it. Of course, if you're MBNA, you feel like if you have to change your procedures to recoup the 1%, you might as well take the opportunity to jack your rate up to 3% while you're at it...
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See http://www.bankrate.com/brm/news/cc/20050624b1.asp
(I cannot format this table into FT...)
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That's partially true. Visa/MC no longer build the 1% into the exchange rate. In a move to be more transparent, Visa/MC will bill the issuing bank the 1% and leave it up to them how to collect it from their cardholders. Visa instituted the new change already, MC has removed the 1% and will start charging the banks in November I believe.
So if your bank suddenly starts charging you a 1% fx surcharge, they're really not making any extra money off of it. Of course, if you're MBNA, you feel like if you have to change your procedures to recoup the 1%, you might as well take the opportunity to jack your rate up to 3% while you're at it...
I was actually referring to the USD foreign transaction (transaction done in a foreign country but in USD), will Visa/MC still bill the bank for the 1%? From what I was told, it is no longer billed if the currency is in USD.
Please help confirm.
Thanks,
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I was actually referring to the USD foreign transaction (transaction done in a foreign country but in USD), will Visa/MC still bill the bank for the 1%? From what I was told, it is no longer billed if the currency is in USD.
You have it backwards. In the past, the 1% was only for forex purchases. If you were overseas and getting billed in USD, there was no charge. With their new policies, Visa charges the bank 1% for all foreign purchases (regardless of currency). MC will still only charge the 1% for foreign currency purchases until Oct 1. This was discussed here:
http://www.flyertalk.com/forum/showthread.php?t=401958
(look around post #161)
There's a link to a USA Today article discussing the changes:
http://www.usatoday.com/travel/news/2005-04-21-card-fees_x.htm
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1-2% is acceptable but 3% is outrageous NTM in some coutries they tack on a surcharge for using a credit card. Of course if you are a good customer you can dispute the charges and sometimes they will remove them. I agree CC companies at times are getting very greedy.
-UFFA
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Well BofA is taking over MBNA.
So you can expect 3% for any MBNA card which wasn't charging 3% already.
Maybe more since they may have to recoup an expensive acquisition.
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Well BofA is taking over MBNA.
So you can expect 3% for any MBNA card which wasn't charging 3% already.
Maybe more since they may have to recoup an expensive acquisition.
I think that the only MBNA cards w/o a 3% rate are those where there's some sort of contractual agreement with the affiliated group/company. So until those contracts come up for renewal, expect the status quo.
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Have a new Advanta Business card and here is their foreign currency statement. Does this say what I think it says--that they don't charge the typical 3% fee? I only travel out of the country maybe once a year so am probably not the most qualified at interpreting these statements...
"Foreign currency and international transactions
Account transactions made in countries other than the US and/or in currencies other than US Dollars will be converted to US transactions in US Dollars under the regulations for such matters established and in effect from time to time by our card issuer membership organizations. Any such conversion may occur on a date other than the date of the transaction, and the currency conversion rate applied to the transaction may be different from the rate available to the membership organization. We do not determine the currency conversion rate used and we do not receive any portion of the currency conversion rate or of any fees that may be charged by those organizations. If we elect to charge you a separate fee in connection with such transactions, that fee will be disclosed to you. You agree to pay the converted amounts and fees."
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I just got my Citi statement and had the separate fee for charges in Canada. I called, and they said they always charged a fee but now it is a separate line item.
The fee bugs me because I always heard you got the best exchange rate by using your cc, maybe you get the best rate but get screwed on the fee.
I used my card for business and expensed off my charges now I have to expense off the fee. I'm sure others disagree, but if your going to screw me then build it into each transaction so I can't see you screwing me.
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Well, the reason why it's a separate fee now is because people were complaining before that it was a hidden fee that was inadequately disclosed (and there were several lawsuits over it). I guess they can't win. :)
But at 3%, you're probably best off getting cash from an ATM and spending that (that is, if your bank doesn't charge you exorbitant fees), but you're probably still better off using your CC than exchanging currency at the airport or something.
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Well, the reason why it's a separate fee now is because people were complaining before that it was a hidden fee that was inadequately disclosed (and there were several lawsuits over it). I guess they can't win. :)
But at 3%, you're probably best off getting cash from an ATM and spending that (that is, if your bank doesn't charge you exorbitant fees), but you're probably still better off using your CC than exchanging currency at the airport or something.
I hear ya! For business expenses it's a pain separately, for pleasure I will now use cash. I always have some Cdn cash, and then I'll just go to the bank once I get there. It isn't worth 3% for the miles.
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Chase - 3.5% and $3.00 - $5.00 international withdrawal fee, applied to all types of account.
Bank of America - 2 to 3% and $2.00 - $5.00 international withdrawal fee. Though BoA has an ATM netowrk that for example if you take cash out from Scotiabank in Canada, there is no international withdrawal fee. The high end of fee applies to accounts based in Florida.
Because of the above, I recently opened an account with Wachovia - they only charge 1% (so far) and 2 free withdrawal on non Wachovia ATM per statement cycle.
Will be in Canada in September. We also always have some CAD. Will see how it works out with our newly open Wachovia account.
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I recently received the MBNA Charles Schwab Visa card.
The disclosure pamphlet says there's NO FX fee.
How can that be? I thought all MBNA cards went up to 3%.
Comments?.......
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I've used Amex internationally for a long time at 2% - that is my max for FX fees. I just dumped my MBNA card because they cranked it to 3% (this was for my Quantum card, supposedly their best customers - not anymore!).
I use Citibank for my checking account, and they charge 1% on foreign ATM withdrawls, and $2 for a non-Citi ATM (international or domestic). No $2 fee if you use a Citibank ATM (but you still get nailed with the 1% over interbank), which can be quite plentiful in certain countries.
Washington Mutual is still charging Interbank on ATM withdrawls (when I talked to them last week) but with a $4 ATM fee.
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My MBNA Merrill Lynch Visa is not charging FX fees either. This is even better than a year ago when they were charging 1%. There seems to be other MBNA cards that aren't charging too. My friend has a UCLA Alumni Visa with no FX fees. It seems to depend on the affiliation.
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My MBNA Merrill Lynch Visa is not charging FX fees either. This is even better than a year ago when they were charging 1%. There seems to be other MBNA cards that aren't charging too. My friend has a UCLA Alumni Visa with no FX fees. It seems to depend on the affiliation.
I have called MBNA several times and they told me ALL of their cards are at 3% now (i.e. Merril Lynch, Fidelity, etc)
Apparently they are very sure of their answer as they immediately knew what to say without asking their superior or looking it up.
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By the way, I now use an AmericanBank.com ATM/Visa overseas.
For ATM fees, they'll compensate you $6/month even with overseas withdrawals (1% FX)
With the Visa portion of the card they charge 1%.
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I have called MBNA several times and they told me ALL of their cards are at 3% now (i.e. Merril Lynch, Fidelity, etc)
Apparently they are very sure of their answer as they immediately knew what to say without asking their superior or looking it up.
Well from experience, as of 2 weeks ago, they did not add FX fees to my charges in the UK. Also no additional charges to my purchases in HK. I have heard others say the same with some other MBNA cards.
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I am extremely in hearing an insider's perspective on what will happen to cards like the MBNA Charles Schwab once BoA gets to consolidating offerings. I know for sure that the Charles Schwab charges 1% at this time, and have a strong hunch that the AAA/Merrill does the same for now. I am not so sure about Wachovia, Fidelity, and Suntrust. Most remaining MBNA cards have been bumped up to 3%.
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Going to Europe very soon. I have both Amex and United Visa. Amex = 2%, Visa 3%. Since credit cards use the interbank rate, is it better still paying everything with credit card or buying cash prior to trip or visiting local ATM in europe. I would figure credit card is still best option?
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Going to Europe very soon. I have both Amex and United Visa. Amex = 2%, Visa 3%. Since credit cards use the interbank rate, is it better still paying everything with credit card or buying cash prior to trip or visiting local ATM in europe. I would figure credit card is still best option?
Almost certainly!
ATMs have the ATM fee as well as the conversion, so I find them second best, but they're still head and shoulders over trying to convert cash.
As to buying cash (a wad of pounds or euros, I suppose you mean?) before departing the US, if you can find a bank that charges under 2% conversion fee, have at it. However, for major purchases (hotels, expensive gifts, etc.) the credit card is probably still better because of the "float", the miles/points, and the remedies in case of rip-off (cash is just plain gone in such cases).
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Went to BofA to buy Euros this Spring and found the exchange rate used for this service costs you close to 10 %. Yes I said 10 %!
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Went to BofA to buy Euros this Spring and found the exchange rate used for this service costs you close to 10 %. Yes I said 10 %!
This doesn't bode well for MBNA cards.
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Scroll down here (http://www.consumer-action.org:16080/English/CANews/2005_Credit_Card_Survey/#Topic_03) to Foreign Transaction Fees and you'll find five banks that impose no fees.
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Just got back from St. Maarten and all our charges on Capital One Go Miles Visa showed up exactly as expected (no fees at all); our receipt shows $300 and so does our statement, $30=$30, etc.
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Just called CapitalOne this week - CapitalOne charges NO forex fees. Not even the 1% fee charged to the bank by Visa/MC. The CSR obviously had a script touting this advantage when I asked. This was right before he tried to upsell me on some protection scheme or another, so some things don't change.
It used to be that the Visa/MC 1% was hidden inside the exchange rate, and the banks were allowed to add their own fee of 1-3% on top of that. Now (since the outcome of the class action lawsuits) the CC companies are required to break out the 1% forex fee and charge the bank. Banks separately charge the customer a fee of up to 3% (or more) but it must be separately broken out and not hidden in the exchange rate.
My Credit Union (Navy Federal) still only has a 1% fee.
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The Pentagon Federal Credit Union Platinum Rewards Visa Card offers 1.25% cash back. Witht the 1 % Visa charge, you net 1/4 percent profit. It worked just fine in Europe this August and September.
Anyone can join this credit union, one way or another. As a last resort, join the National Military Family Association.
Info and links on the Free Cards page (Cash Back Cards section) of the Credit Card section of my website below.
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Capital One is the best choice because it currently charges no additional fees on foreign transactions and absorbs the 1% fee charged by Visa. Next best choice is usually a credit union card e.g. Pentagon Federal Credit Union which charges the 1%.
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Capital One is the best choice because it currently charges no additional fees on foreign transactions and absorbs the 1% fee charged by Visa. Next best choice is usually a credit union card e.g. Pentagon Federal Credit Union which charges the 1%.
Hmm: 1% - 1.25% = ?
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Merrill+ Visa issued by MBNA still does not add a foreign exchange fee, and there is no annual fee for the card.
October 5 transaction posted October 6: GBP 14.49 billed as USD 25.54 = USD 1.7626 per GBP. xrates.com shows these rates:
2005-10-05 Wednesday, October 5 1.7655 USD
2005-10-06 Thursday, October 6 1.7728 USD
dennis
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you all need to draw a distinction between the purchase fees (well discussed above) and the outrageous transaction fees on cash advances
i was in taiwan last month and withdrew NT$3000 just as a test to see if it would work, (about $90US), as a cash advance on my AAdvantage-branded Master Card
i expected to pay a cash advance interest charge from the date of withdrawal, and was charged $0.71 (seventy-one US cents) on my statement
fine, no problem
i was also charged $10.US "minimum transaction fee"!!!!
so they were charging me more than 11% just to get the cash advance!!
i called and was told they do charge 3% of the amount advanced- i.e. had i taken $1000US it would have cost me $30- but that the minimum is $10
after complaining, they credited it back to me
my local bank in NY says i could have used my ATM card and only paid a small fee- like $1.50- for any size transaction
so i'll try that next time
beware of cash advance transaction fees on your credit cards
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The Fidelity MBNA Mastercard (No annual fee, 1.5% cash rebate) didn't charge me any fees for purchases made last month. The foreign currency transactions converted at roughly the interbank rate; there were no fees in the finance charge portion of my statement.
Here are the details (I'm including the interbank rate from OandA.com on both the transaction date and the post date; I'm not sure which is used by MBNA:
19 Sept Charged GBP 20, converted to $36.03 or USD 1.8015/GBP. Interbank rate was 1.8086/1.8047
22 Sept Charged RUB 3,320, converted to $117.12 or RUB 28.34/USD. Interbank rate was 28.39/28.35
23 Sept Charged RUB 1,287, converted to $45.16 or RUB 28.49/USD. Interbank rate was 28.54/28.39
25 Sept Charged GBP 22.45, converted to $39.88 or USD 1.7763/GBP. Interbank rate was 1.7757/1.7716
25 Sept Charged GBP 15.8, converted to $27.98 or USD 1.7708/GBP. Interbank rate was 1.7757/1.7792
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The Fidelity MBNA Mastercard (No annual fee, 1.5% cash rebate) didn't charge me any fees for purchases made last month. The foreign currency transactions converted at roughly the interbank rate; there were no fees in the finance charge portion of my statement.
Here are the details (I'm including the interbank rate from OandA.com on both the transaction date and the post date; I'm not sure which is used by MBNA:
19 Sept Charged GBP 20, converted to $36.03 or USD 1.8015/GBP. Interbank rate was 1.8086/1.8047
22 Sept Charged RUB 3,320, converted to $117.12 or RUB 28.34/USD. Interbank rate was 28.39/28.35
23 Sept Charged RUB 1,287, converted to $45.16 or RUB 28.49/USD. Interbank rate was 28.54/28.39
25 Sept Charged GBP 22.45, converted to $39.88 or USD 1.7763/GBP. Interbank rate was 1.7757/1.7716
25 Sept Charged GBP 15.8, converted to $27.98 or USD 1.7708/GBP. Interbank rate was 1.7757/1.7792
MBNA said they don't charge currency exchange fees, just as nyventurecapital said. MBNA's written terms and conditions also say no such fees, and that they use the interbank rate. My few foreign currency charges over the past couple of month indicate this is correct. Moreover, they will have to notice cardholders before imposing a charge, and MBNA said they list all such charges as a seperate line item on statements, so it will be easy to spot if they begin to tack on fees.
With 1.5% cash back from Fidelity, this is a 4.5% savings over cards like MP Visa and it seems a pretty good deal for those with hefty overseas purchases. Any thoughts from experts such as PGary?
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In the course of this thread about the costs when using CCs abroad, there has been only passing mention of ATMs when traveling. What about the costs associated with them, especially any variable ones based on the amount of local currency withdrawn?
I do not recall any notice of the per transaction fixed fees one routinely encounters here in the States (usually $1 or $2), and my own bank imposes no charges to my account for the use of other banks' ATMs, domestic or foreign. So where am I getting hit - unfavorable exchange rates between the local currency and the dollars coming out of my account?, fees that are buried in there?
I thought that if one wasn't uncomfortable drawing large sums of cash from ATMS while abroad and settling hotel and restaurant bills with cash, one could manage on $500 a day or whatever the limits for withdrawls from ATMs, and one didn't need the paper trail that credit cards give, then ATMs were a good way to go.
Why not more reliance on ATMs while abroad? What am I overlooking or unaware of?
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If you use "Search this forum" for the term "ATM" you will see discussions of this issue in other threads...
http://flyertalk.com/forum/showthread.php?t=475241&highlight=atm
http://flyertalk.com/forum/showthread.php?t=455351&highlight=atm
...my own experience with a Visa check card was that a 2% fee was incorporated into the exchange rate.
dennis
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I think ATMs weren't being discussed because they were slightly off-topic for the thread.
Having said that, in the last acquisition wave my bank instituted a $5 fee for international ATM use. This makes it possibly less attractive than credit cards, especially conssidering that my CapitalOne Mastercard has a 90-day grace period on top of no foreign use fee.
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There are a number of banks that charge no fee for use of ATMs, and a few who give rebates for fees of other banks, and at least one that does all of these plus pays a good rate of interest on your money. If someone starts a thread specific to this question, I will respond to it.
The problem, of course, is where to post it. Do the moderators have guidance on this? ATMs are not credit cards, and thus discussion on them probably does not belong here.
If someone starts a thread, please send me a Private Message telling me where it is.
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If you use "Search this forum" for the term "ATM" you will see discussions of this issue in other threads...
http://flyertalk.com/forum/showthread.php?t=475241&highlight=atm
http://flyertalk.com/forum/showthread.php?t=455351&highlight=atm
...my own experience with a Visa check card was that a 2% fee was incorporated into the exchange rate.
dennis
The conversation on that thread was about using ones credit cards to get local currency from ATMs while abroad. I am not interested in using credit cards to get local currency while abroad, but rather to use my ATM card for that purpose, drawing on what is on deposit in my checking or savings accounts back home.
It seems to me that while this thread and this forum are about credit cards, it is not wildly OT to discuss in a conversation about how banks stick it to us with their 3% vigorish for foreign exchange transactions whether ATMs cannot be used to avoid such charges. Getting local currency through ATMs while abroad has both obvious advantages and disadvantages (e.g., peril of carrying large amounts of cash on one's person, no paper trail for expenditures, no "float" for expenses, no bonus miles, etc.), but it is the possible hidden ones I wonder about.
So unless the moderator wants to bounce this to somewhere else (where?), I would like to hear why or why not on ATMs withdrawls from personal account for cash needs abroad (not ATM withdrawls with credit cards). Any "hidden" downsides, especially hidden or underappreciated costs that make it better to charge everything to credit cards even with 3% bank surcharges?
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Re: the Fidelity MBNA Mastercard, I haven't been charged any foreign exchange fees either and the 1.5% rebate is passive, i.e. when you accrue $50 in rebates the $$ are automatically put into your brokerage account. You don't have to make a phone call to request a rebate, like on most Citi rebate cards.
Re: ATM withdrawals, I've used my credit union ATM card all over the world and have never been hit with any fees from my bank. That's a good enough reason to join a credit union right there. YMMV. ^
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Re: the Fidelity MBNA Mastercard, I haven't been charged any foreign exchange fees either and the 1.5% rebate is passive, i.e. when you accrue $50 in rebates the $$ are automatically put into your brokerage account. You don't have to make a phone call to request a rebate, like on most Citi rebate cards.
Re: ATM withdrawals, I've used my credit union ATM card all over the world and have never been hit with any fees from my bank. That's a good enough reason to join a credit union right there. YMMV. ^
I don't have any accounts with a credit union, but I believe I am getting the same advantage from my own bank. And like you, I have never been hit with any fees when out of the country (USA) withdrawing local currency from a bank ATM.
So what are we missing, where are the banks putting it to us, why is this not clearly a superior way to go rather than letting credit card companies hit us with their 3% surcharges? Why, for example, not pull the local equivalent of $400 or whatever is needed to satisfy a hotel bill or pay the restaurant tab rather than give them my credit card and pay the credit card company and extra $12 (maybe $60 or more, depending on expenditures, for a 10 day stay outside the country)?
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Here is a good site w/ foreign exchange percentages for mileage/points earning cards.
http://www.andrewcram.com/frequentflyerCC.html
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The problem is that the USA banks charge foreign transaction fee on V and MC but provide no service whatsoever for this fee.
In VISA and MasterCard network ALL foreign transactions are exlusively processed by the respective networks not by the banks. USA bank has nothing to do with conversion and has no related costs.
The fraud, as has been suggested by others, is not greater abroad. Every time I use my card in Europe they make me show the passport.
Anyhow - the cardholder's USA bank is not exposed to fraud losses, because it always makes a chargeback to the bank that services the mechant's account - i.e. the bank abroad.
VISA and MC networks charge a fee for the conversion and it is built into the exchange rate thay they choose.
Thus USA banks charge the fee for nothing or rather for behaviour.!!
There were already court cases where such a fee was found illegal because most of the time banks did not disclose them or even did not show them on bills.
After the case law developed - banks started showing the fee on bills but it still does not make them legal. Arguably the only pseudo-legal support exists if banks discolse the fee in the card agreement. Than the argument become: "so what that we do not provide any service for the fee we charge - you agreed to it" - a reasonable court should find that argument frivolous and kick such contract of adhesion out. In a normal country - banks would need to provide a service if they charge a fee - but in the USA it is all right and they can do what they want.
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The problem is that the USA banks charge foreign transaction fee on V and MC but provide no service whatsoever for this fee.
In VISA and MasterCard network ALL foreign transactions are exlusively processed by the respective networks not by the banks. USA bank has nothing to do with conversion and has no related costs.
The fraud, as has been suggested by others, is not greater abroad. Every time I use my card in Europe they make me show the passport.
Anyhow - the cardholder's USA bank is not exposed to fraud losses, because it always makes a chargeback to the bank that services the mechant's account - i.e. the bank abroad.
VISA and MC networks charge a fee for the conversion and it is built into the exchange rate thay they choose.
Thus USA banks charge the fee for nothing or rather for behaviour.!!
There were already court cases where such a fee was found illegal because most of the time banks did not disclose them or even did not show them on bills.
After the case law developed - banks started showing the fee on bills but it still does not make them legal. Arguably the only pseudo-legal support exists if banks discolse the fee in the card agreement. Than the argument become: "so what that we do not provide any service for the fee we charge - you agreed to it" - a reasonable court should find that argument frivolous and kick such contract of adhesion out. In a normal country - banks would need to provide a service if they charge a fee - but in the USA it is all right and they can do what they want.
I can't imagine success based on the argument that these were contracts of adhesion, not when you are under no pressure of any sort to carry and use the card.
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Usbank just started charging 3% on my Worldperks card for foreign transanctions. I switched to Bank of America
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I don't have any accounts with a credit union, but I believe I am getting the same advantage from my own bank. And like you, I have never been hit with any fees when out of the country (USA) withdrawing local currency from a bank ATM.
So what are we missing, where are the banks putting it to us, why is this not clearly a superior way to go rather than letting credit card companies hit us with their 3% surcharges? Why, for example, not pull the local equivalent of $400 or whatever is needed to satisfy a hotel bill or pay the restaurant tab rather than give them my credit card and pay the credit card company and extra $12 (maybe $60 or more, depending on expenditures, for a 10 day stay outside the country)?
Which bank do you use? It may vary per bank.
My wife and I recently honeymooned in Australia/NZ, and I didn't check our foreign ATM withdrawls until this thread. After calculating it out, it looks like Chase (our bank, and my wife's employer) was hitting us with a 2.75% surcharge, which got wrapped into a poorer exchange rate. The rate on our bank statement was .788, and the interbank rate was .761 or so.
Ironically enough, my wife works in foreign exchange! At least I had an Amex card at my disposal, so only got hit with 2% most of the time.
I'll be looking for a credit union soon! :) Luckily our trip this month is to the Bahamas, where the Discover card is accepted a fair amount. 0% fees on Discover!
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I think that since the class action suits of a couple of years back, banks are required to separately disclose currency exchange fees (generally they're classified as finance charges although they're a one-time, flat fee) and not wrap them into the exchange rate. But the banks are free to choose the exchange rate to use, and the rate can be based on a different day than the day of the purchase. As a result the rate applied to the transaction may not be the same as the official rate on that particular day.
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I don't have any accounts with a credit union, but I believe I am getting the same advantage from my own bank. And like you, I have never been hit with any fees when out of the country (USA) withdrawing local currency from a bank ATM.
I will amend that "never been hit with any fees when out of the country (USA) withdrawing local currency from a bank ATM." A couple of weeks ago in Puerto Vallarto, Mexico, I found that local bank was going to take a flat $3 (USD) fee on any cash (pesos) withdrawal from their ATM. I opted to rely on cash (USD) to cash (pesos) exchanges, as well as AmEx travelers checks and credit cards, so can't report on additional, if any, transactional costs to get local currency from ATM (e.g., "currency conversion fees"). Still think ATMs an attractive way to go, complementing travelers checks, with credit cards in reserve. (Will do the ATM thing next week in Munich to see what happens there.)
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It's been a while since the last message in this thread was posted - and I wonder if anyone has anything new to say? I'm going to Japan in April - will be charging a fair amount on credit cards (surcharges could run into hundreds of dollars) - and wonder which is the best to use. So far - the best candidate seems to be my Merrill Lynch MBNA card - but I can always get a new credit card before I leave. Robyn
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Resurrecting an old thread.
I'll be traveling in Asia (SIN, NRT) after June this year. Among others, i have a MBNA issued Credit Union Card that used to have just the Visa Foreign Currency fees. Effective June MBNA is tacking on another charge (as others have reported elsewhere in this forum), making it 3% just like the others.
I searched a bit here and the only card that eats the Fx transaction fees seems to be the ones from CapitalOne.
Before I proceed with that, what do others based in the US, use when traveling in Asia? Any reason to consider a SPG Amex or another card?
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Resurrecting an old thread.
I'll be traveling in Asia (SIN, NRT) after June this year. Among others, i have a MBNA issued Credit Union Card that used to have just the Visa Foreign Currency fees. Effective June MBNA is tacking on another charge (as others have reported elsewhere in this forum), making it 3% just like the others.
I searched a bit here and the only card that eats the Fx transaction fees seems to be the ones from CapitalOne.
Before I proceed with that, what do others based in the US, use when traveling in Asia? Any reason to consider a SPG Amex or another card?
In Asia - VISA seems to be accepted almost 99% of the time that credit cards are taken. MC probably about 90%, and then Amex about 85%. Most cards are taken in the larger cities, but when you're in the smaller cities in China (for example) - I've had places that only take Visa or cash.
So, first off, stick with VISA in Asia. Capital One seems to be a favorite, as the fx fees may be absorbed. Also, keep in mind the Pentagon Federal Credit Union Visa (1% forex fee, then 1.25% cash rebate = net rebate of .25%). See pgary's previous mentions of this card.
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I think that since the class action suits of a couple of years back, banks are required to separately disclose currency exchange fees (generally they're classified as finance charges although they're a one-time, flat fee) and not wrap them into the exchange rate. But the banks are free to choose the exchange rate to use, and the rate can be based on a different day than the day of the purchase. As a result the rate applied to the transaction may not be the same as the official rate on that particular day.
This whole thing started with the class action lawsuit, VISA/MC used to build the 1% into the exchange rate and pass the US$ amount to the issuing bank. Some self acclaimed "consumer protector" thinks this 1% is not fair becaused its hidden and started the lawsuit. VISA/MC lost/settled the case, in order to make the 1% legal, the banks has to change their system to separate the charges, while they were at it, the bank decided to recoup the loss from the lawsuit by changing the sur-charge amount coming from VISA/MC before passing onto the cardholder.
So who should we blame this 3% fee for? I for one won't blame the bank on this one.
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We just returned from Japan and are receiving our credit card statements (note that credit cards were more widely accepted than we thought in Japan). I can't say for sure (it's hard to match up my daily currency charts with the credit card bills) - but it looks like the Merrill + (https://card.ml.com/MLRewardsCenter/View-Cards/MERRILL.htm) card (Visa/MBNA) we used performed as promised (no currency markup). It isn't a great card for rewards - but it is free - so I'd recommend it to avoid currency markups. You don't have to be a ML customer to get one. Robyn
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Has Visa changed its fee structure for international transactions?
Effective April 1, 2005 Visa assesses a 1% International Service Assessment (ISA). The ISA is not a currency conversion fee but rather a charge to issuing banks for their use of the global payment system. Visa will no longer charge issuing banks the 1% Multicurrency conversion fee. It is important to note that issuing banks, not Visa, determine the cardholder pricing structure. Visa cardholders receive, through their Issuers, an effective foreign exchange rate that is typically better than converting cash at a local currency dealer. However, your conversion rate may differ depending on whether the merchant converts the currency at the point of sale and the terms or if the bank that issues your card assesses a foreign transaction fee.
Effective June 9, 2005, Visa suspended the ISA on all single-currency cross-border transactions. Visa is now reviewing the fee structure related to single-currency cross-border transactions. We believe this action will help address issues raised by cardholders, merchants, and Member financial institutions, and allow Visa the flexibility to respond to marketplace changes and ensure fair and equitable support for the global payment system.
Visa remains committed to providing consumers a safe, efficient and secure method of payment when traveling abroad. Since 1986, when Visa first offered currency conversion services through Visa's member banks, we have given our cardholders convenient access to better currency exchange rates than would otherwise be available to them. Over the years, Visa has become a symbol of international acceptance, and we view currency conversion services as paramount to providing our cardholders superior services and benefits.
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Has Visa changed its fee structure for international transactions?
Effective April 1, 2005 Visa assesses a 1% International Service Assessment (ISA). The ISA is not a currency conversion fee but rather a charge to issuing banks for their use of the global payment system.
This is exactly what I was talking about, before the lawsuit, VISA does not need to separate the charge, they just receive the transaction, if the currency code is not USD, convert it using whatever exchange rate they have, which was very reasonable, and send the transaction in USD amount to the issuing bank for authorization.
Now, since they can not mark up the exchange rate, the have to create a new field to put the mark up $$$ amount, which also give them the ability to decide when to charge for the mark up.