American Express Membership Rewards - Amex UK: 2.73% commission on transactions

I work in the foreign exchange markets and I avoid using my UK-issued American Express cards for non-GBP transactions because of Amex's 2.73% commission. Amex have always charged this commission, but they used to hide it in the exchange rate. Many UK cardmembers may have noticed that Amex have come clean recently and finally admitted to this commission in their updated terms and conditions. However, Amex cards issued in Germany only charge 1% commission for foreign currency transactions.

This 2.73% commission makes it very expensive to use an Amex card abroad, in comparison to Visa and MasterCard who do not charge such a commission. I have complained to Amex many times about their commission, which I believe is incompatible with a range of cards marketed at frequent travellers and which already carry hefty annual fees. Amex usually respond by stating incorrectly that interbank spot rates are only available for transactions of over USD 500k (not true). They also often incorrectly claim that all other credit cards in the UK also carry a similar commission (not true). The reality is that Visa, MasterCard and Amex all convert non-GBP transactions at an interbank spot rate. Amex then add a commission of 2.73% but Visa and MasterCard do not. It is true that some Visa/MasterCard UK card issuers then add a commission of their own of up to 2.75%.

As well as having confirmed all this with Visa, MasterCard and Amex, I have tested the FX commissions by using an Amex Corporate Card for business expenses and my Nationwide Visa card for personal expenses while on business trips. The end rates I get including commission do confirm that Amex charge 2.73% and that Visa do not. During my honeymoon recently, I spent GBP 3,500 in non-GBP transactions on my Nationwide Visa card. If I had used any of my Amex cards, I would have paid nearly GBP 100 in commission.

It would be a good idea if all the UK cardmembers in this forum complain to Amex about their 2.73% commission. Don't be fobbed off by any lies about Amex's exchange rates (when including commission) being competitive with other cards, as Amex's rates are nearly always 2.5-3% worse because of the commission. It seems that Amex UK customer services will say anything to customers to get them off this delicate subject. In any case, I strongly advise all UK cardmembers not to use their Amex cards for non-GBP transactions. Any perks you may receive (e.g. Membership Rewards or BA Miles) are worth only a fraction of the extra 2.73% commission you pay.

I believe this does not apply to US$ transactions

Also discussed in the BA forum (http://www.flyertalk.com/forum/Forum15/HTML/005559.html)

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by fbgdavidson:
I believe this does not apply to US$ transactions</font>

It applies to all non-GBP transactions and always has done. Don't pay any attention to Amex's method of calculating rates via USD, as this makes no difference to anything. All FX cross rates are calculated via USD or via EUR (for many European currencies), and Amex are only explaining the way their internal system derives rates between GBP and another currency. As the commission is applied after the currency conversion, it makes no difference whether the original transaction was denominated in USD or another currency. You still pay commission of 2.73%.

While reducing one's exchange costs is always desirable, this practice is not exactly unusual. Amex (and DC) in the US charge 2%, and most US-based Visa and MC charge 2-4%. Numerous threads on FlyerTalk discuss the structure of the various charges and practices of specific issuers in the US (to avoid repeating the discussion here).

This is why I maintain 2 sets of credit cards: US$, GBP, and whichever has the lowest exchange fee for everything else.

[This message has been edited by chalf (edited 11-11-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by chalf:

This is why I maintain 2 sets of credit cards: US$, GBP, and whichever has the lowest exchange fee for everything else.
</font>

being a UK resident, can I obtain an AMEX in Euros?

Amex isn't the worst offender. Barclays (http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=popup1group&value=4870&target=_blank&site=pfs) charge 2.75% for "Barclays handling costs and any VISA processing fees" on all debit card transactions made outside of the UK.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by dabbagmm:
being a UK resident, can I obtain an AMEX in Euros?

</font>

Yep:

http://www24.americanexpress.com/icc/personal_main.asp?aexp_nav=wwps_emeaiec

Thanks,
Richard

Nationwide Visa is probably the cheapest card for FX availabe in the UK. It's just a shame they've started to charge for cash advances.....

Maybe more poeple need to start asking the question - am I defined by the plastic I carry or am I better off financially by choosing a different card?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by RichardMannion:
Yep:

http://www24.americanexpress.com/icc/personal_main.asp?aexp_nav=wwps_emeaiec

Thanks,
Richard</font>

I've just enquired about getting a EUR-denominated Platinum card and was told that, even though I already pay GBP 275 for the GBP-denominated Platinum card, I would still have to pay an additional EUR 400 for an EUR-denominated Platinum card. Given that I can receive the benefits of Platinum only once (e.g. travel insurance, Priority Pass, concierge etc), it makes no sense to charge separately for both cards. In fact, charging me additionally for a EUR card makes no more sense than charging me additionally for the GBP secondary "A.C" card that is currently provided for free.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by nfh:
(...) I would still have to pay an additional EUR 400 for an EUR-denominated Platinum card. Given that I can receive the benefits of Platinum only once (...)</font>

Right, that's why you should apply for an International Euro Green or Gold card instead.

The International Euro Centurion card is offered at a 50% reduced annual fee for existing International Dollar Centurion cardholders, because of those benefits (Priority Pass, Starwood Platinum, etc.) you can only receive once.
I don't know for other Intl. cards.

Even if the International Dollar & Euro cards are issued and managed by Amex UK, sharing most benefits (and sometimes the level of Customer Service http://www.flyertalk.com/forum/frown.gif ) of GBP cards, they are considered as separate products.


Commissions : Amex sent an update of the conditons (to at least all german and french cardholders) explaining how the foreign currency transactions are charged to Euro denominated cards.

- no fee on Euro expenses for Euro denominated cards in all countries of the Euro-zone

- all other charges are converted to US$ first, and then from US$ to Euro using the interbank rates (when available). Then, a 2% fee is added.


[This message has been edited by ahrz (edited Nov 16, 2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ahrz:
Right, that's why you should apply for an International Euro Green or Gold card instead.</font>

These still carry an annual fee of EUR 100 or EUR 200. If I'm already paying GBP 275 for Platinum, why should I pay these fees for Green or Gold benefits that I already have with Platinum? Just as there is no additional charge for the GBP "A.C" additional card, there should be no charge for a EUR or USD additional card. A difference in currency does not increase costs.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by nfh:
...A difference in currency does not increase costs.</font>

Unfortunately, Amex does not offer multi-currency card products. As quoted before, International Dollar and Euro cards are not just UK cards using other base currencies, but different products available also to customers residing outside UK, so the full fee apply for all.