PenFed VISA Changes [Foreign transaction fees, rewards]
 

Received email with several changes to interest rate, late fees and so on but the one change that caught my eye was the rise in ForEX starting Nov 30, 2009.

Time to get a Schwab card I guess....

3. Foreign Transaction Fee. Effective November 30, 2009, Pentagon Federal is increasing the foreign transaction fee to 2% of the U.S. dollar amount of the transaction whether originally made in U.S. dollars or converted from a foreign currency.

and the finer print

Foreign Transactions. The section will be revised to read:

"Purchases and cash advances made in foreign currencies will be debited from your account in U.S. dollars. The exchange rate between the transaction currency and the billing currency used for processing international transactions is either a wholesale market rate or the government mandated rate in effect one day prior to the date processed plus an international transaction fee equal to 2% of the transaction whether originally made in U.S. dollars or converted from a foreign currency."

Do you have questions regarding these changes? Please call us at 800-247-5626.

I guess we have the CARD act to thank for this.

Thanks for the heads up. At least I have one last trip abroad lasting almost 3 weeks before the change takes effect. I don't know that I will worry about alternatives after that, given that the fee will in effect be 0.75% after the 1.25% cash back.

So let's express our displeasure to them.
 

I was under the impression that

1. PenFed serves a lot of people who are out of the country, and
2. PenFed somewhat altruistically wants to serve those people well.

Guess I was wrong on point 2.

I suggest all of us who hold this card politely write to them objecting to this new policy. It seems completely contrary to their previous business policies. There is no reason for the charge except greed. Visa presents them the bill, they pay it. Shouldn't matter to them where the money was charged.

Well, I just received my notice. After further consideration, I'm not as nonchalant about it as my first post indicated. I agree 100% with Gary.

I also didn't initially notice the language about the fee applying to transactions "whether originally made in U.S. dollars or converted from a foreign currency". That really pisses me off.

Penfed is not a charity either. If they are losing money on forex fees (which are charged by Visa), they need to make it up. Its still 1% less than the "majors" charge. Did you call and complain?

I think anyone that travels internationally should be using a 0% forex fee card anyway, so this change doesn't impact me.

OT but relevant -- who can recommend a card with no forex fee? It sure was nice to be able to combine decent rewards (PenFed's cashback) with a low fee, but zero percent is also a nice enticement.

Schwab Invest First Visa[/URL] (2% cash back, no annual fee, you have to call Schwab to apply)
Any Capital One card
PNC Signature Visa (1% cash back card, First year free, $75/year thereafter; free if you spend $20K on the card)
HSBC Premier

IMHO, not exactly so.

The issue of who charges the fees is, at best, fuzzy. While Visa & MC add a fee to the wholesale forex price of, allegedly, 1%, it is not clear that a very large hunk of this is not rebated to the card issuers in various hidden ways. Kinda like "holdbacks" at new car dealers, used to obscure the real price the dealer pays the factory so they can claim to be selling to you at "invoice" price.

Anything over 1% forex charge is clearly just excess profits for your friendly credit card company. :D

Yep, that's the going theory. But historically credit unions haven't been in the business of screwing their members over, so that "going theory" may need to be changed.

Since neither one of us works for visa/mc, a credit union, or one of the big banks, we can't be sure who along that food chain decided to raise their rates...

All moot if you decide to carry one of the four cards in my post above.

The squeeze is on!

Thanks much!

I could not get the Schwab link to work and saw nothing about credit cards on the site which I found interesting. But then again they could just be working on something at the time unless they are temporarily stopping new credit card applications.

Thanks for the PNC bank link. That is great they even spell it out in their bullets and you do not have to dig around the site to make sure there are no f.t. fees. That looks like the best option for me traveling to London because for some reason Capital One keeps denying me lol.

Penfed introduced new visa card PenFed Promise card with no fees (including foreign exchange fees). But this card doesn't offer any cashback.
This card is suitable for someone spend a lot overseas, thus saving 2 to 3% foreign exchange fees other cards charge.

Quick update. PNC has bitten the dust, their cards all now have forex. Schwab isn't making it easy to apply.