Avoiding 3% Foreign Conversion Fee
 

I would like to bounce this idea off all of you: The facts are these: I know that the basic room price in Swiss Francs is a total of $1'070 CHF or about $890 USD at a conversion rate of .84CHF to one USD. I know that the rate fluctuates but what if I get the hotel to agree (say 7 days before my stay/checkout) to whatever the prevailing rate is at that time (e.g., a rate of $.84CHP to a dollar) and to take US traveler checks denominated in USD. Under this scenario, I would buy Amex travelers checks using my Amex credit card (and being a AAA member, there would be no fee for the checks). I would then have the requisite traveler checks to pay for the room stay in agreed-upon USD, thus not having to use credit cards. What do you think? Am I missing something?

Isn't the buying of traveler checks a cash advance? :confused:

The best way to avoid the conversion fee is to use a card that doesn't charge the fee (or at least charges a fee lower than 3%).

Yes. :p

Why would the hotel agree to take payment in US Dollars? They would then incur a currency conversion charge, not to mention the hassle of going to the bank.

I speculate that the hotel's relationship with its bank would result in much less of a loss as a result of conversion of my dollars to CHF.

I thought that AAA advertises that Amex cheques were free of any fees but don't recall if it is, indeed, a cash advance. I didn't think so.

It is, if only for the simple reason that buying $10,000 in travelers check per month using an MR Amex and then paying the credit card bill using the travelers checks would otherwise be a great free travel scam.

No, it's not. I can buy travellers checks from AAA and not pay a fee for it. It's like swapping currency.

Please locate this credit card. :D

If you buy with a credit card, your credit card issuer certainly will consider it a cash advance.

I concede on the zero fee (although some credit union cards may still rebate the Visa/MC fee). I think CapitalOne Visa/MC still charges only 1% (as it was formerly computed, the 1% Visa/MC fee with no bank fee added). That "avoids" the 3% Amex fee...

That hasn't happened with me. Given my credit card is with MBNA, I find that amazing. :D

Today, I was just quoted $1.399 per euro, with NO FEE at AAA. The Euro is trading at 1.2948. That is 7.5% discount.


In old days, I purchased a lot of foreign currency TC's from AAA. Although I never payed a fee, I never got them at the bank rate either. Nothing like today's discount, but still a 1-1.5% discount.

I have a LH MBNA, and an Amtrak MBNA, and both charge 1.5% per month if I take a cash advance. This may not be seen if one does not pay the cards down to zero each month.

This charge can be huge, as if I use the card in an ATM machine for a lousy 1
$1-200, and have a monthly set of charges to $10k, I get hit the 1.5% on the whole 10k, which is about $150 by my count.

That's a hideous rate. It never ceases to amaze me that currency converters of all stripes manage to pull the wool over so many people with claims of "no fee" and then charge a rate like that.

Unless you are a bank, no business is going to offer you the interbank rate for currency conversion. To do so would be a big money-loser. So whenever you see a claim of no fee, be doubly careful about checking against the market rates.

Your MBNA cards will charge a 3% Foreign Conversion Fee starting July 1. If you haven't gotten the packet of information itemizing these future changes, you will be shortly.

My credit union credit and debit cards only have the 1% Visa charge for foreign use. My US HSBC ATM card only has a 1% charge when used at HSBC ATMs abroad. I have verified these against claims with actual transactions against the interbank rates.

You can find cheaper currency conversion, you just have to look for it.

Not all MBNA cards are adopting the new foreign currency fees. Most are, but a handful are apparently staying at 1%. Check MilesBuzz for details.

I've got two CitiBank cards; one issued by Sears (Gold) and the other is an ATT Universal card (Plat). I called customer service for the Sears card, and was told that there is currently NO currency conversion fee . . . but that there will be a 3% charge starting in June.

The ATT card's customer service claims that there is a 3% currency conversion charge in effect now.

I'm vacationing in the UK for the last two weeks of May, so guess which card I'm using . . .

Yeah, but I think that the rest of them will start changing to 3% soon. I just got a notice on mine this week.

I wonder what suddenly made every card in the US start charging 3%...

What is the link? I couldn't find it on first glance. Thanks.

I don't doubt that eventually all MBNA cards will carry the 3% foreign surcharge, but I was told by an MBNA CSR last night that the surcharge is being implemented on an account-based level. Not sure if she was correct (she sounded like she knew what she was talking about after promptly answering a couple of questions I fired at her correctly--I knew the answers to those questions before I asked because I wanted to test her knowledge of the policy), she told me my account was one of the few not affected by the new surcharge. In fact, she said this new surcharge is a test to see how the market responds. I think if enough affected customers call in to cancel their cards or stop using their cards overseas because of the surcharge, MBNA may back off of this experiment. Quite honestly, the only reason I use my MBNA card is because of its no additional overseas surcharge. If that benefit goes away, so goes my business with MBNA.

LAX

Travelers checks bought with a AAA MBNA credit card are processed as a purchase rather than as a cash advance but you don't earn any miles.

Why bother with a card at all?
 

When I'm abroad, I usually find the nearest Citibank ATM and take out as much cash as I need - no fees anywhere in the world as a Citibank customer; good exchange rate; no hassle; no miles (but hey, they're probably worth less than 2% anyway)

"Why bother with a card at all?" Outside the U.S.? For the same reason that people use them in the U.S.

Welcome to Flyertalk, mblevin.

That's a good idea... I need to start doing that

Look here. The link goes to the last page of the thread (as of this writing) but click back a few pages on that thread to find out more about the specific MBNA cards not charging 3%.

I'd say to be on the safe side, however, try a card from Capital One, Household Bank, or a credit union to avoid the risk of MBNA switching terms on you. (Patelco is a good choice for a 1%-foreign-exchange credit union Visa card if by some chance you don't qualify for membership in another credit union.)

I guess it's okay if you are only going for its credit card, but for those who are thinking about its banking products, watch out for those fineprints at the bottom of its website:

"Patelco Credit Union is privately insured by American Share Insurance up to $250,000 per account.
This institution is not federally insured, and if the institution fails, the federal government does not guarantee that depositors will get back their money.
Accounts with this institution are not insured by any state government."

Not sure what that means, but do pay attention to all fineprints!!

LAX

just found out that my BMW Visa only charges the 1% Visa fee
the card is a freebie, and earns points toward BMW buy/lease
added reward options if you pay $50/year

http://fs.bmwusa.com/BMWFSPulp/CRCAR...rdBenefits.htm