Credit Card Foreign Fee Rip-Off
Posted by Max Dunn Fri, 25 Aug 2006 17:28:00 GMT
It used to be that the best way to buy things in a foreign country was to use your credit card. Not anymore. The fees they are charging now are a big rip-off.
Many US credit cards now charge a 3% fee when buying anything outside the US. Visa/MasterCard charges 1%, which is a reasonable fee considering that they are doing the currency conversion. However, all issuing banks are now charging another 2% for doing … nothing. They charge this just because they can. (Discover is the exception, but then not many foreign merchants take the Discover card.)
To add insult to injury, many credit cards will also charge this 3% fee even if the merchant bills in US dollars. What? The fee is supposed to be for a foreign currency exchange. Why do they charge this when being billed in dollars? Well, because they can.
Here are some of the cards that charge 3% for cross-border transactions even in US dollars:
- MBNA/Bank America
- Wells Fargo
- JP Morgan Chase
- US Bancorp
Here is one that will charge only 1% when billed in US dollars:
- Citibank
Here are some that charge only 1%, for all foreign transactions:
- HSBC
- Providian Financial
- Nordstrom
- Target
And here is one that not only doesn’t tack on 2%, but they also absorb the 1% Visa/MasterCard fee:
- Capital One
Now, here is the final rip-off. Some merchants will tack on a 2% fee on their end. This happened to us at Tivoli Gardens in Copenhagen. Also many rental car companies will do this too. So now you will end up paying an extra 5% for the privilege of using your credit card overseas!
How can you avoid these outrageous fees? The best way is to pay cash whenever possible. Use your ATM card to get cash, but check your ATM fees first. Some charge a fee of $2 plus 1%. Wells Fargo charges a flat $5 per transaction. Bank of America also charges $5, but the fee is waived if you use a foreign bank that is part of the Global Alliance network.
For the big bills, get a Capital One credit card to reduce your fees.
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