Credit Card's Foreign Currency Transaction Fees
March 06, 2005
Cap -@- StopBuyingCrap.com
Do you travel abroad? If so, then you might want to reconsider which ATM/debit card or credit card to bring along for the ride.
In their never ending quest to squeeze more fees out of card users, credit card providers and most financial institutions are now charging foreign currency transactions fees.
But wait, didn’t they already do that before? What happened to that 1% fee that VISA/MasterCard’s been charging?
It’s been replaced by a nice shiny 3% fee, of the total converted amount US amount.
This fee doesn’t necessary apply to all MasterCard/VISA cards though. Some financial institutions (mostly community banks or local credit unions) view the extra fees as negative customer service, and these institutions usually place more value on their customers, hence they may not implement the extra fees. Although in the credit card industry, usually when a new fee starts getting tacked on by a particular provider, others follow suit eventually.
Does your credit card now charge the new transaction fees? Most likely if it’s from one of the national issuers. Didn’t know? Then maybe you didn’t read those little papers filled with words titling: “important notice regarding your account” or “additional amendments to your account”
I received the notice to the additional fees from my Chase MasterCard and my Bank of America VISA card from my monthly statement. Besides the foreign currency fee, my BOA VISA now has a higher penalty APR rate too. Sweet! They also realized they were charging me way too low APR rate for Cash Advances, so BOA has increased it to the normal 20+% (they thought I was still working there).
A friend received the notice from Washington Mutual, stating the change in fees for using her ATM/debit card. The good news is that there were no changes in fee rates from CalNational, his local community bank.
So what to do now with that Euro Trip you’ve been planning? Well, you might want to select specific ATM/debit card, or credit card to carry with you. If you’re stuck with cards that have fees, debit/credit card is still a good deal when you travel abroad. This is because the exchange rates secure by VISA/MasterCard are wholesale rates offered to large banks and corporations, different from the retail rates offered to consumers. So you’re pretty set with good exchange rates when you pay with your plastics oversea. You also usually get better rates and pay less in fees when you withdrawal money at the ATM, compare with going to banks/exchange centers to exchange/withdrawal your money.
For ATM/debit card users though, you might want to consider calling your bank to ask them to increase your ATM withdrawal limits before you head oversea, this will limit those $1 (and up to $5 for some institutions. ouch!) surcharges you’ll encounter at the ATM.
If the fees don’t deter you, the low US dollar rates might. Last year, I paid about $9 USD (about 6 Euro) for a Happy Meal from McDonald’s in Paris. Ouch.
Best solution? Mooch off your relatives when you travel abroad. But I suppose considering those countries/vacation spots where US dollars still have some weight will be good alternatives too.
______________
Sources:
Chase Platinum MasterCard disclosure
Bank of America Platinum VISA Terms and Condition