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Bankrate.com
Are you overcharged for overseas purchases?
Friday June 24, 6:00 am ET
Kristin Arnold


Your credit card company is making a killing off the money you spend on your foreign vacation, and you might not even know it.
This extra profit is called a "foreign currency-conversion fee," and you could be paying up to 4-percent extra when you make an overseas purchase with a credit card.
One percent of that charge comes from the Visa or MasterCard networks, which charge a 1-percent fee for converting your foreign-currency purchase into American dollars.


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On April 1, Visa replaced its 1 percent currency-conversion charge with a 1 percent "transaction fee." MasterCard plans to start charging the same transaction fee starting Oct. 1, replacing its current 1-percent currency-conversion charge.

No matter what you call it, it's a good deal. Changing your money in almost any other manner will probably cost you a lot more.

But many credit card issuers and banks are cashing in by adding a 2 percent to 3 percent charge on top of that 1 percent without doing a thing to earn it.

"Banks have been making a profit off their customers for a long time, while providing no service," says Linda Sherry, the editorial director for Consumer Action in Washington. "Visa and MasterCard are doing all the work; it's simply pure profit for banks."

Ed Perkins, syndicated travel columnist and author of "Business Travel When It's Your Money," agrees.