Rebel against the Foreign Tranaction Fee
 

The problem is that the USA banks charge foreign transaction fee on V and MC but provide no service whatsoever for this fee.
In VISA and MasterCard network ALL foreign transactions are exlusively processed by the respective networks not by the banks. USA bank has nothing to do with conversion and has no related costs.
The fraud, as has been suggested by others, is not greater abroad. Every time I use my card in Europe they make me show the passport.
Anyhow - the cardholder's USA bank is not exposed to fraud losses, because it always makes a chargeback to the bank that services the mechant's account - i.e. the bank abroad.
VISA and MC networks charge a fee for the conversion and it is built into the exchange rate thay they choose.
Thus USA banks charge the fee for nothing or rather for behaviour.!!
There were already court cases where such a fee was found illegal because most of the time banks did not disclose them or even did not show them on bills.
After the case law developed - banks started showing the fee on bills but it still does not make them legal. Arguably the only pseudo-legal support exists if banks discolse the fee in the card agreement. Than the argument become: "so what that we do not provide any service for the fee we charge - you agreed to it" - a reasonable court should find that argument frivolous and kick such contract of adhesion out. In a normal country - banks would need to provide a service if they charge a fee - but in the USA it is all right and they can do what they want.

I can't imagine success based on the argument that these were contracts of adhesion, not when you are under no pressure of any sort to carry and use the card.

Usbank just started charging 3% on my Worldperks card for foreign transanctions. I switched to Bank of America

Which bank do you use? It may vary per bank.

My wife and I recently honeymooned in Australia/NZ, and I didn't check our foreign ATM withdrawls until this thread. After calculating it out, it looks like Chase (our bank, and my wife's employer) was hitting us with a 2.75% surcharge, which got wrapped into a poorer exchange rate. The rate on our bank statement was .788, and the interbank rate was .761 or so.

Ironically enough, my wife works in foreign exchange! At least I had an Amex card at my disposal, so only got hit with 2% most of the time.

I'll be looking for a credit union soon! :) Luckily our trip this month is to the Bahamas, where the Discover card is accepted a fair amount. 0% fees on Discover!

I think that since the class action suits of a couple of years back, banks are required to separately disclose currency exchange fees (generally they're classified as finance charges although they're a one-time, flat fee) and not wrap them into the exchange rate. But the banks are free to choose the exchange rate to use, and the rate can be based on a different day than the day of the purchase. As a result the rate applied to the transaction may not be the same as the official rate on that particular day.

ATM experience in Mexico
 

I will amend that "never been hit with any fees when out of the country (USA) withdrawing local currency from a bank ATM." A couple of weeks ago in Puerto Vallarto, Mexico, I found that local bank was going to take a flat $3 (USD) fee on any cash (pesos) withdrawal from their ATM. I opted to rely on cash (USD) to cash (pesos) exchanges, as well as AmEx travelers checks and credit cards, so can't report on additional, if any, transactional costs to get local currency from ATM (e.g., "currency conversion fees"). Still think ATMs an attractive way to go, complementing travelers checks, with credit cards in reserve. (Will do the ATM thing next week in Munich to see what happens there.)

It's been a while since the last message in this thread was posted - and I wonder if anyone has anything new to say? I'm going to Japan in April - will be charging a fair amount on credit cards (surcharges could run into hundreds of dollars) - and wonder which is the best to use. So far - the best candidate seems to be my Merrill Lynch MBNA card - but I can always get a new credit card before I leave. Robyn

Resurrecting an old thread.

I'll be traveling in Asia (SIN, NRT) after June this year. Among others, i have a MBNA issued Credit Union Card that used to have just the Visa Foreign Currency fees. Effective June MBNA is tacking on another charge (as others have reported elsewhere in this forum), making it 3% just like the others.

I searched a bit here and the only card that eats the Fx transaction fees seems to be the ones from CapitalOne.

Before I proceed with that, what do others based in the US, use when traveling in Asia? Any reason to consider a SPG Amex or another card?

In Asia - VISA seems to be accepted almost 99% of the time that credit cards are taken. MC probably about 90%, and then Amex about 85%. Most cards are taken in the larger cities, but when you're in the smaller cities in China (for example) - I've had places that only take Visa or cash.

So, first off, stick with VISA in Asia. Capital One seems to be a favorite, as the fx fees may be absorbed. Also, keep in mind the Pentagon Federal Credit Union Visa (1% forex fee, then 1.25% cash rebate = net rebate of .25%). See pgary's previous mentions of this card.

This whole thing started with the class action lawsuit, VISA/MC used to build the 1% into the exchange rate and pass the US$ amount to the issuing bank. Some self acclaimed "consumer protector" thinks this 1% is not fair becaused its hidden and started the lawsuit. VISA/MC lost/settled the case, in order to make the 1% legal, the banks has to change their system to separate the charges, while they were at it, the bank decided to recoup the loss from the lawsuit by changing the sur-charge amount coming from VISA/MC before passing onto the cardholder.

So who should we blame this 3% fee for? I for one won't blame the bank on this one.

We just returned from Japan and are receiving our credit card statements (note that credit cards were more widely accepted than we thought in Japan). I can't say for sure (it's hard to match up my daily currency charts with the credit card bills) - but it looks like the Merrill + card (Visa/MBNA) we used performed as promised (no currency markup). It isn't a great card for rewards - but it is free - so I'd recommend it to avoid currency markups. You don't have to be a ML customer to get one. Robyn

Has Visa changed its fee structure for international transactions?
Effective April 1, 2005 Visa assesses a 1% International Service Assessment (ISA). The ISA is not a currency conversion fee but rather a charge to issuing banks for their use of the global payment system. Visa will no longer charge issuing banks the 1% Multicurrency conversion fee. It is important to note that issuing banks, not Visa, determine the cardholder pricing structure. Visa cardholders receive, through their Issuers, an effective foreign exchange rate that is typically better than converting cash at a local currency dealer. However, your conversion rate may differ depending on whether the merchant converts the currency at the point of sale and the terms or if the bank that issues your card assesses a foreign transaction fee.

Effective June 9, 2005, Visa suspended the ISA on all single-currency cross-border transactions. Visa is now reviewing the fee structure related to single-currency cross-border transactions. We believe this action will help address issues raised by cardholders, merchants, and Member financial institutions, and allow Visa the flexibility to respond to marketplace changes and ensure fair and equitable support for the global payment system.

Visa remains committed to providing consumers a safe, efficient and secure method of payment when traveling abroad. Since 1986, when Visa first offered currency conversion services through Visa's member banks, we have given our cardholders convenient access to better currency exchange rates than would otherwise be available to them. Over the years, Visa has become a symbol of international acceptance, and we view currency conversion services as paramount to providing our cardholders superior services and benefits.

This is exactly what I was talking about, before the lawsuit, VISA does not need to separate the charge, they just receive the transaction, if the currency code is not USD, convert it using whatever exchange rate they have, which was very reasonable, and send the transaction in USD amount to the issuing bank for authorization.

Now, since they can not mark up the exchange rate, the have to create a new field to put the mark up $$$ amount, which also give them the ability to decide when to charge for the mark up.