A caution for folks travelling outside the US.

The AT&T Universal Card has been acquired by Citibank, and according to a notice they recently sent out filled with small print, effective 1 June 99 they began adding an extra charge for conversion of purchases and cash advances made in non-dollar currencies.

According to the notice, VISA increases the conversion rate by an "international reimbursement rate" and MasterCard increases it by one percent, and then Citibank increases the conversion rate provided by VISA or Mastercard by an additional 2% and keeps the increase.

We've seen this with other VISA and MasterCards (although sometimes the proposed fee has been rescinded when people raised a fuss). Be careful what plastic you whip out when overseas.

Just another reason to use Diners overseas, in my opinion.

Close to the topic of this thread. About two weeks ago I bought something in Turkey using my Visa debit card. My intent was to use a Visa credit card, but absentmindedly used the first piece of plastic with a Visa sticker on it that appeared in my wallet.

When I arrived home I called my bank to see what the converted charge was, and it was only 1% off the floating rate on the day I made the purchase. A couple of days ago my bank statement arrived at home, and there were no foreign or domestic ATM fees added.

Leaving in 2 days for Norway so called the various credit cards today (6/28)to check the foreign conversion rate. All apply the International Exchange rate on the day they receive the transaction from the merchant and United Visa First Card adds 1% - BA Visa First USA adds 1% Diners Club adds 1% Amex adds 2% -So I guess I'll use my Diners and Visa and leave Amex at home!

Renee, please make (just a small) charge with ALL the cards (Amex included) on the same day in Norway - and later compare - and please inform us (and may be "feed back" the worst one).

Have a great trip!

Does Amex charge extra for this. I never did pay attention to my bill. They never tell you the conversion rate anyway.

Rudi - What a great idea! I'll try to do that, and report back when I get the various charge bills. We are taking our 11 yr. old grandaughter along, I'm sure she'll be only too glad to 'help' with the charges!

(aren't you supposed to sleep at the time you posted this - or are you so excited before your trip?).

I like your homepage - which kid is with you on this trip (Sara, Eric, Tamlyn, Raven, Stephen, Leo)?

[This message has been edited by Rudi (edited 06-29-1999).]

Here's the latest info that I have on some of the larger issuers:

Providian Financial: 4% fee on unsecured cards.

Citibank: 2%

First USA: Notified customers of 2% fee but has not imposed it - yet.

American Express: Recently raised fee to 2%.

First Union, MBNA, Bank of America and Chase Manhattan do not charge fees.

Visa and MasterCard always charge a 1% currency conversion fee on all foreign bank card transactions. This includes VisaCheck and MasterMoney debit card transactions.

The basic reason that issuers are starting to charge fees and/or higher fees is because they can. Using a credit card, even with 4% in conversion fees added is still a better deal than exchanging cash at most of the currency exchanges & hotels. Plus, you get a much better base exchange rate.

With all of the 'convenience users' (i.e. non-revolvers), essential elimination of annual fees and the competition causing very low interest rates, issuers have had to look to fee income to shore up the bottom line and keep it growing.

Cheers,

'toad

Hi Rudi,
You're right - sound like my hubby - what am I doing up in the middle of the night? But, I do my best surfing around then. Sydney (from Pasadena, Ca.) is the grandaughter comming with us this trip. She is arriving on a 2:30PM flight this afternoon - Can't wait to see her. I really enjoy your posts, and I love this board. I have been helped by so many wonderful tips - this is really the greatest! Okay - 'nuff gabbing - time for coffee! Regards, Renee

Hammertoad's summary was excellant but I would refine his comment that even with the extra charges, credit cards are better than getting cash at hotels or money exchanges.
If the cc's add these exhorbitant fees, the best way to purchase items overseas will then be to use a debit card tied to your checking account to get cash, which you then use to make puirchases. The conversion rate at ATMs is the same the Visa/MC without the new surcharges. The two probelms with this are you're dealing with cash and you get no points.

I agree with Rudi that credit cards are still better than dealing with crappy exchange rates at hotels and the like, but this issue really irks me.

It was brought home on a recent trip to the Bahamas, where the exchange rate is fixed to the U.S. dollar ($1 US = $1 Bahamanian). So, my charge for $24.50 showed up on my statement as $24.99, a 2% surcharge.

My understanding is that ALL card companies (i.e. Visa, MC, DC and Amex) have always (?) factored in a 1% surcharge for foreign purchases. Now the card issuers (Citibank, etc.) want a piece of the action and are adding fees of 1 to 3% on top.

When I called Citibank to complain, they said that the reason they are instituting this is that when there is a problem with an overseas transaction, it costs them more to resolve the problem. Makes sense, but I pointed out that I have made hundreds of charges in more than two dozen countries over the last decade and I have never had to dispute a single one -- why am I being penalized for another customer's problems?

I would like to suggest that Inside Flyer compile a list of the cards that are not adding surcharges to foreign purchases -- focusing particularly on those that provide miles, of course!

P.S. What's the best deal going for enrolling in Diners at the moment?

roti:

I can confirm your experience. I may be a convenience user (don't carry a balance), but I used to spend approximatley $20,000 to $25,000 per month on my Mileage Plus card. As 99% of those charges were outside the US I was livid when they instituted the 3% surcharge. I wrote irate letters to customer service, management, the FX department, and everyone else I could think of. I explained that this was a STUPID idea for a card that is targeted at business travelers, but if they had to charge extra the least they could do was bury the charge in the FX rate so I didn't get angry every time I looked at my bill. The (form letter) response I received was that they have a higher rate of disupted charges offshore. In my case that is preposterous as most of my charges are hotels, restaurants, and airlines.

Meanwhile, I signed up for a Diners Club card. I have been absolutely overjoyed with the service. As a result, even though MP eventually backed down on the charge they have lost $250,000/year from this former customer.

End of rant. I am just trying to do my part during Merry's absence.

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Cheers,
Hong Kong Flyer
Soon to be London Flyer

for not being in London yet - you do very well already (ranting as Merry...).