travelinfoo

Used my card for a business related charge.

Amex is reports add 2.7% Forex fee to the charge. However, the actual amt that Amex charges is MUCH HIGHER than advertised. The going exchange rate for the date was $1.285 (fluctuating by a few one-thousandths of cents) to 1 euro. Well, Amex used an exchange rate of $1.3056, 2 cents higher than the prevailing rate. In essence, they helped themselves to a charge equal to almost 5% of the charge!
IMO, this is deceptive practice.

A charge done with CapitalOne on the same day revealed they used an exchange rate of $1.287.

beachfan

I'm not sure of

a) Your source of the exchange rate. Most folks use something like what the WSJ does, which is the interbank rate on large transactions.

b) Your math. Two cents on 1.285 is not 5%.

c) The terms on Capital One. I think the use zero foreign exchange fee that they add on (Visa or MC will add on 1% as their slice, which is separate from your bank or Amex's fee.

My guess is that AMEX does exactly what they say they do.

mahasamatman

b) He's including the 2.7% forex fee. The cumulative total is actually closer to 4.3%.
c) The Capital One World MasterCard includes no forex fee and no MC fee. Plus, it's a 1% cash back card...

travelinfoo

Unfortunately, your math is off. Amex charged: 2.7%+1.55% (upcharge from adding 2cents to forex). The rate charged by Amex is as mahasamatman says: about 4.3% EXTRA.
Amex claims to add only 2.7% to foreign charges but the truth is it is much higher.

CapitalOne adds no fees at all. Since their fee is 0%, it is easy to figure out the exchange rate they used.

Also xe.com gives a real time view of Forex. Since I knew I was making a foreign charge, I followed the rates over the course of the day out of curiosity. I never saw a rate above $1.288. Don't know where Amex got their exchange rate.

beachfan

Are you talking about the day of the purchase or the day it posted? I'm not sure exactly what AMEX uses, but my guess is that if you check the rates at adjacent days, you would find that it's in line with one of them.

I've done the math enough times on my statement to be sure that as of last year, when I last checked, it was an honest calculation.

travelinfoo

They were one and the same. Amex posted the charge on the same date it was charged. As did CapitalOne. Yet Amex used a higher forex rate. One that I was unable to find for the date involved. In fact, in subsequent days, the exchange rate has actually DECREASED.

You are fortunate or weren't paying close attention to the actual forex RATE (not Amex added fee) used. By using a higher forex rate, Amex is in essence adding a hidden fee to their overall "exchange".

I only used the Amex because it was a business expense for the business card. OTW, I stopped using it overseas as I noticed this same discrepancy many times before. It is creeping higher as Amex increases its overt "foreign exchange fee". This 2.7% "foreign exchange fee" is DIFFERENT and in addition to the hidden charge from using a higher foreign exchange RATE.

I'm just going to stick to CapitalOne, business expense or not. I want to support those CC that don't scam the consumers with these extra charges that serve primarily as a profit centers with no added service.

CIT85

I used my SPG AMEX for a few charges in France in June, and the charges in US dollars are close to the charges in euros +~3%, so I'm satisfied that the 2.7% was in effect. There was no separate 2.7% fee, the fee was included in the effective conversion rate. My Visa charges during the same trip had separate line item of the 3% forex fee.

acf573

OP, just for clarity, exactly what day was the charge made on?

LIH Prem

For Amex (and probably Visa/MC as well), I think you need to use the posting date, not the date of the charge, to determine the conversion rates and fees. IIRC, there's a calculator on xe.com for calculating the exact hidden credit card charges.

-David

travelinfoo

Amex charge AND posting were Aug 12th. Exchange rates since 11th have been $1.28ish or LOWER on xe.com. Amex used $1.305 for the Aug 12th posting/charge and their 2.7% charge was posted as a separate line item from the converted charge.

CapitalOne's charge AND posting were also on the 12th. Their exchange rate was $1.287.

Charges AND posting to the BOTH CC were the same date. So why the large difference in exchange rates? (FYI, 2 cents is a huge amt to fluctuate in ONE day.) Since the Amex charge was a large one, it made a substantial addition to the costs.

I have noticed this difference in the past. As a result, stopped using the Amex overseas, even before they upped their "convenience fee".

beachfan

On August 11, it opened at roughly 1.315 and closed at 1.285, a 3 cent fluctuation just the prior day.

acf573

Interesting. I was wondering if it had been done on the 11th (when, as beachfan noted, the euro got crushed) in which case Amex could be slightly lagged, but a 2 day lag seems very odd.

I've also noticed Amex as being a bit strange as to the exact exchange rate they choose to use. With Citibank I can look at spot rates on various days and am almost always extremely close (say within 25 basis points or so). Amex much less so.

In fact, reading their forex disclosure, it says:
This basically seems to give them carte blanche to choose the rate over a 2 day period that favors them the most. It would be interesting to know what a euro-denominated Amex card used as the conversion rate for a USD purchase on 8/12.

The lesson seems to be, when using Amex after a large currency move in your favor, try to wait 2 days after if possible.

monahos

The US HHonors Amex card has also started charging the same 2.7% 'foreign transaction fee'.

The rate used was 1.319$/1€, on 8/10.

I fully share travelinfoo's position on this new practice

BonViveur

Amex's terms in Australia are that if a foreign currency charge is made, it is converted to USD first and then to AUD. This amounts to a considerably greater fee than mentioned below. Count yourselves lucky!

ac777

For Canada Amex first converts foreign transactions to USD and then to CAD-- this leads to a much higher exchange fee. For myself I use AMEX in US and Canada and VISA elsewhere for the larger purchases.