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The greed gets bigger. Not that Citibank does the conversion, but according to a flyer I received with my bill (Citi MyPoints card), they have upped the conversion rate to 3.0%. Along with Visa/MC's 1.0% rate, that's 4.0% added to whatever is spent overseas. I'll continue to use either my AMEX or MBNA card overseas, thank you. :cool:
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Others are doing this also. In addition to the Citibank notice, I got one in this month's Bank One/Chase cc about a new 3% fee. And I got a notice in my WAMU checking account about foreign currency fees, too!
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I just saw the Chase one as well. :( Greedy SOBs.
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Also read Chase/First Bank comes up at 3% somewhere :( ...forgot where...reading too many things lately.
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MBNA charges only a 1% total foreign currency fee, and no annual fee on many of its cards. With an MBNA Fidelity MC, you also get 1.5% cash rebate to your Fidelity account.
Comparing this to the new rates mentioned above goes like this:
Costs/Benefits:
Bank with 4% fee 4.0%
MBNA Fee (1.0)%
MBNA Fidelity rebate 1.5%
------
Total excess cost 4.5%
If the bank with the 4% fee gives you FF miles, you're paying 4.5 cents per mile IN CASH to get those miles.
This makes lotto tickets look like a good deal.
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B of A is doing the same thing. Does anyone have a suggestion for a credit card company that does not charge this convesion fee or that has the smallest conversion fee?
I am dropping my B of A card and my Citi Card for international travel, actually I am going to cancel one of both of them after I find one thats more international friendly.
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Apparently MBNA doesn't charge a high conversion fee. Also, a lot of Credit Union Visa/MC don't charge any conversion fees.
This list at bankrate.com (http://www.bankrate.com/brm/news/cc/20020513c.asp) may be outdated, but it gives you a good idea of which cards to avoid overseas.
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Keep in mind that starting next month, Visa and MasterCard will no longer be charging their 1% currency conversion fee. To compensate for this "loss," Citibank and other card issuers will charge the full 3% themselves---so with no fee assessed by Visa/MC, you won't be paying 4%, just the same 3% as always.
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My worry is that Citibank's flyer describes the transaction fee as a "FINANCE CHARGE" (their caps). This doesn't mean that it's like a cash advance, where the grace period is eliminated for purchases and a finance charge kicks in on the whole balance, does it?
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I can understand why they can't continue to call it a "conversion fee", since they don't do conversion (or anything else) for it, but I'm concerned about this new designation as a "finance charge". If I recall correctly, you don't get AA miles on annual fees, penalties, finance charges, etc.
Does this change of name mean that you won't even receive miles on the 3% charge?
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Does this change of name mean that you won't even receive miles on the 3% charge?
Correct. Miles on purchases only. But unless one is a VERY big spender in foreign currency (in which case it'd be best to switch to an MBNA or other fee-free card) it won't be a big loss.
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I think that this change is the result of a class action lawsuite where the card issuers were accused of not properly disclosing the fees for foreign transactions by "hiding" at least 1% of that fee in the conversion rate. I to agree that the amount most charge for foreign conversion is greedy (3% is ridiculous), but the current change doesn't really change the rate, it just discloses it as a separate charge. It is confusing to call this a finance charge, but my guess is that that is also dictated by the termsof the settlement, or by other laws that require certain fees to be considered when disclosing APR's.
A few years back when Diners Club added its own markup (it had been my preferred card fro foreign purchases) I got a Quantum card that I use for my foreign travel specifically because it is one of the few cards that still charges only 1% (before this change, it was 0 percent added to the 1% built into the conversion rates). MBNA just changed my Quantum to a signature card without my asking (and I notice in another thread why this was - they get a higher discount rate from the merchant), so I called to confirm that the new card had the same rate for foreign charges, and they confirmed it did.