As I understand it, Citi AA credit card charges overseas are hit with a 3% "commission," a good reason not to use them abroad. Citi ATM withdrawals, if done at a Citi machine overseas are converted at the interbank rate with no other charges. If not done at Citi machine charges are pretty high.

I withdrew cash at a Citibank in Seoul and I saw a 1% foreign transaction fee, but no fee for cash withdrawal at Citibank ATMs in Singapore and Jakarta. I don't know why they are different.

I don't believe that's true. The latest T&C I have from a Citi credit card (dated 12/06) have a transaction fee for foreign currencies, not one for foreign charges (I believe there was also discussion in this thread that this would be the case):
They don't say anything specifically about overseas USD purchases, but they do discuss a little bit about the situation if the merchant does the conversion into USD without mentioning additional fees.

Another data point.

I usually purchase a ticket on the Chilean site of Lan with this card once or twice a year and the charge in USD has never (yet) had any additional transaction fee added.

I withdraw at the Citi branch office ATMs at St. Petersburg and Moscow, Russia, Shanghai, HongKong, London, Paris, Ireland... they all have the 1% ATM charges. I will never use it at Non-Citi owned ATM's.

If you want to avoid the 1 %, use the Bank of America ATM at the BA branch or its partner bank ATM's. There is no charge and the exchange rate is even better (at least for the above locations) than Citi.

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As I understand it, Citi changed its ATM charges around Nov. 1 of 2006 to the no fee at Citi ATMs. Perhaps the withdrawals you discuss were made before the fee changes? In any event, it is not always possible for Citi customers to use Citi ATMS, e.g., in France there is only one Citi location in the entire country, as far as I could find out.

I just called Citibank Diners Club 1-800-2-DINERS, Citibank Hilton HHonors 1-866-517-7795, and Citibank AAdvantage World MaterCard 1-888-766-2484. The first two (Diners and Hilton) said there definitely would be a 3% charge for a US dollar charge outside of the States; the last (AAdvantage) said that there would be no charge. If anybody has the time, give it a try and see what answers you get.

I use Schwab Visa managed by MBNA for overseas. It just went from no foreign currency conversion fee to 1% fee. However, I got the card last April initially for its $100 Visa gift card sign up bonus and at the time it specifically said there was no conversion fee for applications made before xx date. Dont know how the rule applies to current application given MBNA is purchased by BofA, and all Fidelity cards now charge 3%.

I use BofA ATM card in countries where it has its own Int'l ATM network - namely UK - Barclays, France - BNP, Germany - Deustch bank, Australia/NZ - WestPac, Canada/Mexico - Scotia. No fee and very competitive rates.

Otherwise I use Wachovia ATM card and there is 1% fee.

I am thinking about to get an HSBC account as HSBC is everywhere. I used my Wachovia ATM card at T3 of CDG to get Euro as there is only one HSBC machine. There was a 1% fee on my Wachovia statement. (Flew in from Liverpool on EasyJet and took the Roissy Bus to town for our hotel InterContinental Le Grand at L'Opera).

So, how come Citi has been charging me 3% on the few occasions when I use the AA card in Europe or Asia?
Am I confused, or are they?

You will not avoid any fees with HSBC as HSBC maintains each country as a seperate bank and the fee for foreign transactions still apply.

Are you charging those purchases in USD? If not, Citi will definitely charge you a 3% foreign currency conversion fee. The issue is whether or not they charge 3% for foreign purchases made in USD also.

The even more in depth question is: when the foreign purchases were being converted to USD by the merchants, are there a 3% or more "fee" built in the exchange rate used?

Hertz converted our rental car charge in Scotland, to USD, without even informing us such practice. The rate they used to convert the GBP to USD is exactly 3% higher than the prevailing rate at the time. At least my Schwab Visa did not add any more fee on that, though it totally defeat the purpose of using Schwab card for the rental car.

There are a lots of talks about double charges on the purchases being "BILLED" in USD. 3% on top of 3%. You are seeing more and more places have a default option of converting foreign currency billing in USD on your card - you have to manually choose the other option, so the charge to your card is in local currency. I just experienced this when purchased tickets on Virgin Blue, Australia.

Just cancelled out the MyPoints WM CC I just got (wanted the 5000 MYPTS) , turns out they charge only 1% for Forex.

But with only 1 pt per $1 , for what I cash out for it gets me less than 1% in value back, so need to keep the card. But some might be able to find what they want that yields them a 1% value in Redemption or maybe other WM CCs are also 1%.

We were in Mexico a few weeks ago. I used my Fidelity Visa (MBNA/BofA), SPG Amex and Citi AAdvantage cards.

My Fidelity Visa statement does not show any FX charge. The exchange rate used was close to the rate for that day. I assume if there was an FX fee, it would have been shown seperately.

On my Citi statement, the exchange rate was pretty close to the exchange rate on the date of transaction. The bottom of the statement shows the 3% FX fee I was charged.

My Amex statement shows no seperate FX fee. I noticed that the rate Amex gave me was approximately 2% less than the exchange rate in effect on the date of processing (i.e. - the 2% fee they charge).