I received notice yesterday that the Mastercard I've been using for years to make purchases abroad will begin imposing a 3% currency conversion fee effective 1 April. Until now, it has only charged the 1% fee imposed by Mastercard, and because I do make a fair amount of non-US dollar charges, I have foregone the miles or points I could earn with an affiliated card and instead used this fee-free card. The math has obviously changed.

I know that Capital One imposes no conversion fee, and AMEX imposes a 2% fee, but are there any hotel- or airline-affiliated cards which don't impose more than the 1% fee that Visa and Mastercard impose? The Capital One doesn't offer "real" miles or points, and I doubt I'd be able to take advantage of the rewards it offers. Any information would be appreciated.

Merrill+ Visa issued by MBNA. No annual fee. No foreign currency exchange fees. Reasonable rewards, including 1:1 redemption for British Airways Executive Club miles in 5,000 point increments.

I would not be surprised if they were to add a foreign currency fee, but inasmuch as there is no annual fee it seemsto be low risk to use it in the interim.

dennis

MBNA's AAA Visa and Pentagon Federal Credit Union's Visa both charge 1%. The later gives a 1.25% rebate on all purchases, neting you a profit. Both are described on the Free Cards Page, Cash Back Cards section of the Credit Cards section of my website below.

Capital One actually has a cash back card. The offer tends to change quite frequently. What I see now is 1% cash back, 2% on groceries, payable in $25 chunks as a statement credit or check. A good deal if they stick with 0%. Though you then have to deal with Capital One...

Regarding the MBNA cards (Merrill+, AAA), I would guess at the first opportunity possible they will be converted to 3% as BofA is buying MBNA.

There's one long thread about this over in MilesBuzz.
I expect you'll find it quite comprehensive if you have the time to read it all!

Best card for foreign exchange?
http://www.flyertalk.com/forum/showthread.php?t=401958

I believe cards serviced for other financial institutions, such as Merrill Lynch, are contractually different than affinity cards and that Merrill decides the terms. Still I cannot see any reason Merrill would choose not to charge a fee if their primary competitors already charge because they are not marketing this as a feature.

Thanks for the info. pgary, I'd always discounted the Pentagon FCU's Visa on the assumption that I couldn't qualify, but after clicking through on your website, I learned that by paying $20 to join an auxiliary, I could. The things one learns through FlyerTalk ! Too bad the card doesn't earn miles or points, but you're right, the cash back more than makes up for that.

As you noted acf573 , the problem with the Capital One card is that you have to deal with Capital One . . .

jbfield, believe it or not, I did a search for threads dealing with currency conversion fees before posting this question, but obviously I didn't choose the right search terms; I'll try to do better next time. After all, it was the first time I've ever started a thread. (And you're right about the length of time it took to scan the other thread.)

I know this has been beaten to death on other threads but it seems like a very fluid situation with many companies changing terms as of April 1, 2006.

Is the CapitalOne card still the lowest foreign conversion fee at 1%?

If so, can CapitalOne miles/points be converted into BA miles?

The Merrill+ card looked like the winner until another poster said Bank of America was buying them. They will surely impose the 3% fee like they have with all their other acquisitions.

Capital One is actually at 0%. And yes, that is the lowest. Cap One "miles" are essentially just points that you can apply to purchasing a plane ticket.

though they still charge the 1% pass through fee from MC - or at least, that's what they told me on the phone yesterday. I use my local credit union credit card when I travel abroad - 1%, and no rewards - but no games, and the money stays in the local community. I don't travel internationally more than a couple times a year, so I don't lose a lot in rewards.

I also just use my local credit union's credit card when traveling abroad. No hassles, low conversion fees (1%), no worries. ^

My understanding is that they're at 0% and they eat the 1% (this was also mentioned in an article posted here in the last week). This is somewhat untenable over the long term, but to date, they have not introduced a change (to my knowledge). The guys that previously only had the 1% Visa/MC fee got caught a bit by the change in policy. For instance, my credit union had a period of a bit less than a year where they were at 0% because they didn't have the software set up to tack on 1% for all foreign-originated charges. In contrast, those banks that previously tacked on an extra 2% could pretty easily change their software to do 3%.

That said, I use my Citi PP and Amex SPG when abroad. PP earns ~2%, 3% fee = -1%. Amex SPG I count as ~1.9%, ~2% fee = -0.5% or so after accounting for Amex's less competitive exchange rate. These options are competitive with a no reward, 1% card and don't have to deal with another piece of plastic.

I recently responded to a Washington Mutual Visa card solicitation that had a 1% international service fee.

The fact is Visa and Mastercard updated their system to impose an association fee of 1%. All VI & MC cards will have a 1% Foreign Transactions Fee as a result of the "WALMART LAWSUIT SETTLEMENT" Everything Walmart does is good for Walmart and bad for everyone else. Now off of the soapbox. The associations charge 1% as a seperate line item. The banks can add a surcharge to this fee as per their contract. This amount can be from 0% to 5% for doing absolutely nothing. The result is that for a VI or MC you will pay between 1% & 6% for any foreign transactions. I did a little research and this is what I found out. Bank of America cards are all 3%, Chase cards are all 3%, HSBC is 2% eeck, American Express is 2%, Discover is 0% (but only good in North America), Nordstrom is 1%, most credit unions are 1%, Macys is 1%, Juniper Bank is 2%, US Bank is 3%, MBNA is 1% on some and 3% on others but will increase all cards to 3% as of April 2006, Capital One is 1%. I hope this information is of help to you.

And Citibank??????