3% Fee on Foreign Currency Transaction
 

I just noticed this term:

Transaction Fee for Purchases made in a Foreign Currency: 3% of the amount of foreign currency purchase after its conversion into U.S. dollars.

Is this a normal procedure for a MasterCard? My MC from Chase always charges me 3% for foreign purchases. Any other cards that do not do this?

Fees seem to range from 1-3%. I use a Paypal debit card, and 1% is the norm there.

How about American Express?

I cancelled my AMEX card in the late 80's because they charged 2%. I don't know if they're still the same or not. Call up the customer service number and I'm sure they'll tell you.

Hard to understand
 

This seems to be the custom in the US. I have an European Visa, MC and DC and none of those charge any fee for Foreign Purchases. I think you Americans should not accept this situation. I think the reason for the fee is that most Americans never travel abroad so they don't care.

I was always telling people to use an MBNA card for foreign transactions, never to use American Express. Now it looks like my MC's and Visas all are charging 3%, and Amex is still at 2%. I'm taking my Amex (even though it is not as widely accepted).

Not so for all cards. MBNA is a mixed bag. Some cards only charge Visa/MC 1% others the full 3%. Capital One Cards only charge Visa/MC 1%.

MBNA is trying 3% on some cards. Says reason is high over seas fraud loss. Suspect tsastor is correct that most Americans do not care. However the volume of complaints here shows that FT Americans do. Since 1% is min and Amex is 2% and points are worh at least 1% I mostly use Amex or get cash with my debit card.

It's simple: American Credit Cards Companies are Greedy. Just look at how much various credit card fees have risen in past 5-6 yrs, not to mention 10 yrs. It's absurd! Credit card companies will continue to increase and create new fees, as long as enough American cardholders put up with it.

mshaikun - if you notice, I did say that MY mc's and visa's charge 3% now, there may be some out there that don't, but after checking on the cards I have, they charge 3%.

I noticed. That is why I said

"Not so for all cards. MBNA is a mixed bag."

There are MC's and Visa's that charge less. Even some issued by MBNA. You need to change cards or get separate card for international travel if you travel much internationally .

citi aadvantage your best bet

You're kidding right? It gets 3% on foreign transactions. Just got a Capital One Ultra offer based upon 80 points per dollar of ticket price. It only gets 1% of foreign transactions. My $220 US Airways ticket to LGA would be available at anytime for 17,600 points and I'd get miles when I used te ticket.

My Starwood Card gives AA miles. A $20,000 spend = 25,000 miles. beats CITI but as an Amex card it is not taken everywhere. Still it is my favorite card.

The real question is now much do you charge in a foreign currency when you are out of the USA. 1-3 thousand dollars may add only an extra 10-30 dollars out of your pocket. Is the concern really worth it?

The problem is that 3% is almost invariably greater than the value of the points, miles, cashback, or other quasi-currency one is getting, so it negates the benefits of using one's card. (This is because the interchange fees charged to merchants are rarely in excess of 3%, so the value of whatever the issuer gives you to keep you as a customer is naturally going to be at least slightly less than that, so they can turn a profit.)

My USAA Master Card and Charles Schwab VISA (MBNA) cards both charge 1%. The cards charging 3% get to stay home except for one AmEx (just in case).

Some corrections to what has been posted before:

Visa and MasterCard charge 1% currency conversion fee for foreign currency transactions to all banks and credi unions. This 1% is not bad at all, since they use the interbank exchange rate, which is better than the exchange rate we get when buying foreign currency on any bank or money exchange office (for small transactions). Appart from this 1% conversion fee, the banks could charge additional fees (1% or 2% more), and that is what is actually happening with credit cards like Citi, Chase, Bank of America, etc. They just figure out how to bring more money to their P&L's...

For someone who travels a lot, the best advice I can give is to get a credit card from a credit union or a small bank who only charges the 1% currency conversion fee and use the normal points or miles card for all transactions done in the USA...

Credit Card fees have been increased in the last five years because the US Credit Card business is saturated, so the only way to increase profits is to charge more fees...

MasterCard does not currently charge 1%, although they may begin to in the autumn. For the next several months, a 0% surcharge issuing bank with a MasterCard-branded card would have 0 (ZERO) markup from the interbank rate.

I was told by my bank that as of June 2005, VISA now also stops charging 1% foreign transaction fee.

It is the bank that will continue charging the fee, not Visa nor Master Card.

That's partially true. Visa/MC no longer build the 1% into the exchange rate. In a move to be more transparent, Visa/MC will bill the issuing bank the 1% and leave it up to them how to collect it from their cardholders. Visa instituted the new change already, MC has removed the 1% and will start charging the banks in November I believe.

So if your bank suddenly starts charging you a 1% fx surcharge, they're really not making any extra money off of it. Of course, if you're MBNA, you feel like if you have to change your procedures to recoup the 1%, you might as well take the opportunity to jack your rate up to 3% while you're at it...

See http://www.bankrate.com/brm/news/cc/20050624b1.asp

(I cannot format this table into FT...)

I was actually referring to the USD foreign transaction (transaction done in a foreign country but in USD), will Visa/MC still bill the bank for the 1%? From what I was told, it is no longer billed if the currency is in USD.

Please help confirm.

Thanks,

You have it backwards. In the past, the 1% was only for forex purchases. If you were overseas and getting billed in USD, there was no charge. With their new policies, Visa charges the bank 1% for all foreign purchases (regardless of currency). MC will still only charge the 1% for foreign currency purchases until Oct 1. This was discussed here:
http://www.flyertalk.com/forum/showthread.php?t=401958
(look around post #161)

There's a link to a USA Today article discussing the changes:
http://www.usatoday.com/travel/news/...ard-fees_x.htm

1-2% is acceptable but 3% is outrageous NTM in some coutries they tack on a surcharge for using a credit card. Of course if you are a good customer you can dispute the charges and sometimes they will remove them. I agree CC companies at times are getting very greedy.
-UFFA

Well BofA is taking over MBNA.

So you can expect 3% for any MBNA card which wasn't charging 3% already.

Maybe more since they may have to recoup an expensive acquisition.

I think that the only MBNA cards w/o a 3% rate are those where there's some sort of contractual agreement with the affiliated group/company. So until those contracts come up for renewal, expect the status quo.

Interpreting new card int'l policy--help?
 

Have a new Advanta Business card and here is their foreign currency statement. Does this say what I think it says--that they don't charge the typical 3% fee? I only travel out of the country maybe once a year so am probably not the most qualified at interpreting these statements...

"Foreign currency and international transactions

Account transactions made in countries other than the US and/or in currencies other than US Dollars will be converted to US transactions in US Dollars under the regulations for such matters established and in effect from time to time by our card issuer membership organizations. Any such conversion may occur on a date other than the date of the transaction, and the currency conversion rate applied to the transaction may be different from the rate available to the membership organization. We do not determine the currency conversion rate used and we do not receive any portion of the currency conversion rate or of any fees that may be charged by those organizations. If we elect to charge you a separate fee in connection with such transactions, that fee will be disclosed to you. You agree to pay the converted amounts and fees."

I just got my Citi statement and had the separate fee for charges in Canada. I called, and they said they always charged a fee but now it is a separate line item.

The fee bugs me because I always heard you got the best exchange rate by using your cc, maybe you get the best rate but get screwed on the fee.

I used my card for business and expensed off my charges now I have to expense off the fee. I'm sure others disagree, but if your going to screw me then build it into each transaction so I can't see you screwing me.

Well, the reason why it's a separate fee now is because people were complaining before that it was a hidden fee that was inadequately disclosed (and there were several lawsuits over it). I guess they can't win. :)

But at 3%, you're probably best off getting cash from an ATM and spending that (that is, if your bank doesn't charge you exorbitant fees), but you're probably still better off using your CC than exchanging currency at the airport or something.

I hear ya! For business expenses it's a pain separately, for pleasure I will now use cash. I always have some Cdn cash, and then I'll just go to the bank once I get there. It isn't worth 3% for the miles.

FYI some banks charge high fee for foreign ATM withdrawals
 

Chase - 3.5% and $3.00 - $5.00 international withdrawal fee, applied to all types of account.

Bank of America - 2 to 3% and $2.00 - $5.00 international withdrawal fee. Though BoA has an ATM netowrk that for example if you take cash out from Scotiabank in Canada, there is no international withdrawal fee. The high end of fee applies to accounts based in Florida.

Because of the above, I recently opened an account with Wachovia - they only charge 1% (so far) and 2 free withdrawal on non Wachovia ATM per statement cycle.

Will be in Canada in September. We also always have some CAD. Will see how it works out with our newly open Wachovia account.

I recently received the MBNA Charles Schwab Visa card.

The disclosure pamphlet says there's NO FX fee.

How can that be? I thought all MBNA cards went up to 3%.

Comments?.......

I've used Amex internationally for a long time at 2% - that is my max for FX fees. I just dumped my MBNA card because they cranked it to 3% (this was for my Quantum card, supposedly their best customers - not anymore!).

I use Citibank for my checking account, and they charge 1% on foreign ATM withdrawls, and $2 for a non-Citi ATM (international or domestic). No $2 fee if you use a Citibank ATM (but you still get nailed with the 1% over interbank), which can be quite plentiful in certain countries.

Washington Mutual is still charging Interbank on ATM withdrawls (when I talked to them last week) but with a $4 ATM fee.

My MBNA Merrill Lynch Visa is not charging FX fees either. This is even better than a year ago when they were charging 1%. There seems to be other MBNA cards that aren't charging too. My friend has a UCLA Alumni Visa with no FX fees. It seems to depend on the affiliation.

I have called MBNA several times and they told me ALL of their cards are at 3% now (i.e. Merril Lynch, Fidelity, etc)

Apparently they are very sure of their answer as they immediately knew what to say without asking their superior or looking it up.

By the way, I now use an AmericanBank.com ATM/Visa overseas.

For ATM fees, they'll compensate you $6/month even with overseas withdrawals (1% FX)

With the Visa portion of the card they charge 1%.

Well from experience, as of 2 weeks ago, they did not add FX fees to my charges in the UK. Also no additional charges to my purchases in HK. I have heard others say the same with some other MBNA cards.

I am extremely in hearing an insider's perspective on what will happen to cards like the MBNA Charles Schwab once BoA gets to consolidating offerings. I know for sure that the Charles Schwab charges 1% at this time, and have a strong hunch that the AAA/Merrill does the same for now. I am not so sure about Wachovia, Fidelity, and Suntrust. Most remaining MBNA cards have been bumped up to 3%.

Going to Europe very soon. I have both Amex and United Visa. Amex = 2%, Visa 3%. Since credit cards use the interbank rate, is it better still paying everything with credit card or buying cash prior to trip or visiting local ATM in europe. I would figure credit card is still best option?

Almost certainly!

ATMs have the ATM fee as well as the conversion, so I find them second best, but they're still head and shoulders over trying to convert cash.

As to buying cash (a wad of pounds or euros, I suppose you mean?) before departing the US, if you can find a bank that charges under 2% conversion fee, have at it. However, for major purchases (hotels, expensive gifts, etc.) the credit card is probably still better because of the "float", the miles/points, and the remedies in case of rip-off (cash is just plain gone in such cases).