Go Back  FlyerTalk Forums > Miles&Points > Credit, Debit and Prepaid Card Programs > Credit Card Programs
Reload this Page >

Foreign exchange rates discussion [FOREX]--all cards

Foreign exchange rates discussion [FOREX]--all cards

Reply

Old Jan 30, 15, 7:03 pm
  #1  
Original Poster
2019 FlyerTalk Awards
 
Join Date: Feb 2001
Programs: IHG Plat, Hilton Gold, Accor Gold, Marriott Silver
Posts: 3,929
Foreign exchange rates discussion [FOREX]--all cards

It has been my experience with a Chase Visa (with, theoretically, no foreign exchange fee) that the exchange rate used would average less than 0.5% above the mid-rate quoted on xe.com. In the past few months, this has risen to over 1%. While you can argue various reasons why Visa's exchange rate might differ from other sources, including date of transaction vs date of posting, etc, for a single transaction, that's the average I'm seeing.

Comparing an IHG Mastercard gives me Chase MP Visa charging up to 1.27% more than the Mastercard for same-day same-currency transactions.

It appears as though Chase/Visa has gradually instituted an effective 1% foreign exchange fee which doesn't occur on the Mastercard. Certainly makes the IHG card a lot more attractive.

Last edited by Kremmen; Sep 23, 15 at 10:41 pm
Kremmen is offline  
Reply With Quote
Old Jan 30, 15, 9:21 pm
  #2  
 
Join Date: Feb 2013
Location: Scottsdale, Az.
Programs: US Gold & AA Lifetime Gold
Posts: 216
Interesting. I was wondering about this subject. I live in Mexico about 80% of the year and have been using Chase SP and Ink depending on what the spend is. My Barclays US Air MC cards just began offering the no forex fee benefit. I guess I should make two identical purchases using a different card for each to see if the exchange rate is different.
Maz67 is offline  
Reply With Quote
Old Feb 2, 15, 8:42 pm
  #3  
 
Join Date: Aug 2005
Location: US, CA, HK
Programs: UNITED 1P
Posts: 497
I also want to chime in that the recent rates in Chase Sapphire prefered was terrible. And I had questioned Chase on the rate because I checked the rate visa published on their website and Chase didn't use any of the visa rates whether it was day of spend or day of posting. It was ard 1% difference. Unfortunately Chase CSR was of no help and the difference I lost was only $20 USD so I didn't press any further. But now I have to be more careful and monitor for foreign spend.
nanirina is offline  
Reply With Quote
Old Feb 2, 15, 10:19 pm
  #4  
Original Poster
2019 FlyerTalk Awards
 
Join Date: Feb 2001
Programs: IHG Plat, Hilton Gold, Accor Gold, Marriott Silver
Posts: 3,929
Originally Posted by nanirina View Post
And I had questioned Chase on the rate because I checked the rate visa published on their website and Chase didn't use any of the visa rates whether it was day of spend or day of posting.
I hadn't known Visa had its rates online. Interesting to compare.

e.g. Last month USD vs AUD
16th:
xe.com: 0.819748
oanda.com: 0.82025
usa.visa.com: 0.829817 (roughly 1.1% above)
17th:
xe.com: 0.822350
oanda.com: 0.82180
usa.visa.com: 0.825817 (roughly 0.5% above)

Looks like Mastercard is using a good mid-rate and Visa is adding from 0.5% upwards and then the Chase Visa rate tends to be even worse. It looks to me as though the differences are greatest when currencies are fluctuating, so I suspect Visa is picking the worst rate of the day to use.
Kremmen is offline  
Reply With Quote
Old Feb 3, 15, 7:25 am
  #5  
A FlyerTalk Posting Legend
 
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 86,673
Originally Posted by nanirina View Post
I also want to chime in that the recent rates in Chase Sapphire prefered was terrible. And I had questioned Chase on the rate because I checked the rate visa published on their website and Chase didn't use any of the visa rates whether it was day of spend or day of posting. It was ard 1% difference. Unfortunately Chase CSR was of no help and the difference I lost was only $20 USD so I didn't press any further. But now I have to be more careful and monitor for foreign spend.
Any examples of someone using the following kind of benchmark test: using four different "no-forex-fee" cards for back-to-back transactions at a particular non-US Starbucks or McDonalds and see what happens? Something akin to near simultaneous use of a Bank A Visa, a Bank A MasterCard, a Bank B Visa, and a Bank B MasterCard to see how it posts for a purchase of the same item.
GUWonder is offline  
Reply With Quote
Old Feb 3, 15, 8:55 am
  #6  
mia
FlyerTalk Evangelist, Moderator: American Express, Citi, Diners Club, Signatures
 
Join Date: Jun 2003
Location: Miami & London
Programs: AA & Marriott Perpetual Platinum; HH Gold
Posts: 36,853
1. The date of purchase is irrelevant. Transactions are always priced when posted, but the rate used is not necessarily the rate established on the posting date. Read your card agreement to see what they use.

2. When you use a card denominated in USD to make a purchase in another currency you are instructing the issuer to purchase that currency on your behalf. You need to look at purchase rates, not fictitious mid-market rates which represent an average of buying and selling rates at an arbitrary time. (It is well established that the published daily fixes were illegally manipulated.) Foreign exchange markets never close, the transaction network can price whenever they choose, and I would expect them to do this in a way which maximizes their profit. I would like to think that competition between MasterCard and VISA would create an incentive for one to offer better rates than the other, but this has little marketing value for consumer cards because they cannot demonstrate a savings that is meaningful for individuals. It could be useful for wooing corporate clients.

3. If you think you have evidence that Chase is adding an undisclosed foreign transaction fee don't write about it here. Hire a lawyer because they are violating a binding explicit antitrust agreement not to do this.
mia is online now  
Reply With Quote
Old Feb 4, 15, 7:12 pm
  #7  
 
Join Date: Oct 2005
Location: SF
Programs: UA, VX, QF, EY, VA
Posts: 756
I had a post here:

http://www.flyertalk.com/forum/23694198-post1272.html

Where I noticed this 1% Visa thing was happening.
patrick.barnes is offline  
Reply With Quote
Old Feb 6, 15, 9:01 am
  #8  
Original Poster
2019 FlyerTalk Awards
 
Join Date: Feb 2001
Programs: IHG Plat, Hilton Gold, Accor Gold, Marriott Silver
Posts: 3,929
Originally Posted by mia View Post
1. The date of purchase is irrelevant. Transactions are always priced when posted, but the rate used is not necessarily the rate established on the posting date. Read your card agreement to see what they use.
I'm not sure why you think reading the card agreement is relevant. As you yourself point out, forex markets never close. Chase can list a transaction online initially with one value and then give it a different value when posted, even when it's posted on the same date. I dare say it's easier to compare the rate at purchase time to the published rates elsewhere at that instant than to compare the posting date rate with the rate at some arbitrary time of day.

You need to look at purchase rates, not fictitious mid-market rates which represent an average of buying and selling rates at an arbitrary time.
Yet, somehow, Mastercard's rates are remarkably close to those "fictitious" mid-market rates.

If you think you have evidence that Chase is adding an undisclosed foreign transaction fee don't write about it here. Hire a lawyer because they are violating a binding explicit antitrust agreement not to do this.
As various comments demonstrate, it seems that it's Visa's doing. Also, whoever's it is, raising awareness and using Mastercard is free. Hiring a lawyer is not.
Kremmen is offline  
Reply With Quote
Old Feb 8, 15, 5:35 pm
  #9  
 
Join Date: Nov 2013
Location: United States
Posts: 526
Visa uses rates based on the previous day and settlement date. Look at the mid market rates for the previous date and it should be closer to the rate listed.

I did some testing recently and it was about 50/50 which rate was better. MasterCard used to add a 1% hidden charge, but this was removed in 2013/2014 I believe.
Doctor of Credit is offline  
Reply With Quote
Old Feb 8, 15, 6:50 pm
  #10  
Original Poster
2019 FlyerTalk Awards
 
Join Date: Feb 2001
Programs: IHG Plat, Hilton Gold, Accor Gold, Marriott Silver
Posts: 3,929
Originally Posted by Doctor of Credit View Post
Visa uses rates based on the previous day and settlement date. Look at the mid market rates for the previous date and it should be closer to the rate listed.
The difference is marginal. I threw a bunch of my transactions from last quarter 2014 and all 2015 so far across 6 currencies into a spreadsheet to see how much more Visa was charging above the mid-rate on average:

Visa vs XE: +.54%
Visa vs XE prev. day: +.52%
Visa vs XE 2014: +.41%
Visa vs XE 2015: +.76%
(c.f. MC vs XE 2015: -.06%)
Kremmen is offline  
Reply With Quote
Old Feb 8, 15, 10:53 pm
  #11  
 
Join Date: Aug 2005
Location: US, CA, HK
Programs: UNITED 1P
Posts: 497
I didn't have time to say test it at various shops using different cards. But I had a hotel charged in jpy which I cancelled. It took many days for the cancellation to appear on my card. On the day of posting, I believe visa's rate published was 119.2, but chase had charged me 119.9. I thought visa's rate was already quite bad because usdjpy was trading mostly between 117-118 in between the days I had cancelled and the day it posted. Needless to say, I was quite pissed off. But given that the net difference was $10 USD I really didn't have the energy to fight over it.


On another note, I do use my US cards in HK all the time, and the rates between visa/mastercard/amex were remarkly close in HK, given that USDHKD hardly moves and is a pegged currency.
nanirina is offline  
Reply With Quote
Old Feb 9, 15, 12:09 am
  #12  
 
Join Date: Dec 2000
Location: Charleston, SC, USA
Programs: Avis Chairman's, Hertz Au+ , IHG Au, Hyatt, Honors Au (Amex), Marriott Pt & Life Au, Accor Ag
Posts: 6,503
I too have noticed that Visa Intl.'s rates are ~.5% above the mid-market. Which is way better than the 2.5%--3.5% of the bad old days before 'no-forex-fee' cards!
Brendan is offline  
Reply With Quote
Old Feb 13, 15, 1:19 pm
  #13  
 
Join Date: Jul 2013
Location: NYC
Programs: UA 1K, AS MVPG, Marriott G, SPG G
Posts: 46
I saw this post and remember when I use both my Chase CSP (Visa) and Citi Prestige (Mastercard) in the UK this January, CSP always have slightly worse FX rate for transactions occurring on the same day almost the same time.
tjtcwfls is offline  
Reply With Quote
Old Feb 14, 15, 12:38 am
  #14  
 
Join Date: Apr 2010
Posts: 267
For Chase I found the rate to be reasonable; less so with AMEX.
GarlicFlyer is offline  
Reply With Quote
Old Feb 14, 15, 3:51 pm
  #15  
mia
FlyerTalk Evangelist, Moderator: American Express, Citi, Diners Club, Signatures
 
Join Date: Jun 2003
Location: Miami & London
Programs: AA & Marriott Perpetual Platinum; HH Gold
Posts: 36,853
Citi issues cards on three networks Here is Citi's explanation of how each network calculates exchange rates. Note that no network makes the conversion based on the transaction date. It is always tied to the posting date. See if there is a basis to choose one over another based on the processes rather than anecdotal reports or vague generalizations.

Information on Foreign Currency Conversion
Our network providers are MasterCard, Visa, and American Express. They convert transactions in foreign currencies into U.S. dollars. The type of card you have determines who does the conversion. Each network provider follows its own procedures. Each network provider’s current procedures are described below. The procedures may change from time to time without notice.

MasterCard uses a conversion rate in effect one day
before its transaction processing date
. It uses a
government-mandated rate if required to do so. If not,
it uses a wholesale market rate.

Visa uses a conversion rate in effect on its applicable
central processing date
. It uses a government-mandated
rate if required to do so. If not, it selects from the range
of rates available in wholesale currency markets. The
selected rate may vary from the rate Visa receives.

American Express uses any conversion rate required
by applicable law. If there is none, it uses the highest
interbank rate
it selects on the business day before the
day it processes the transaction.
mia is online now  
Reply With Quote

Thread Tools
Search this Thread