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Beware of Credit Card Foreign Transaction Fees
by Heshan Demel, CardRatings.com, Consumer Credit Researcher
What you need to know before traveling overseas
Foreign exchange fees on credit cards should be of keen
interest to those traveling beyond the borders of the United
States. Exchange rates offered by credit cards are usually hard
to beat. Of equal and perhaps greater importance, however, is
the foreign transaction fee that your credit card bill might show
once you have returned home from your trip. This fee, which is
often a shock to cardholders, has been increasing as of late. So
cardholders that travel overseas extensively need to be aware of
foreign transaction fees.
Many travelers now rely on credit cards to pay for overseas travel
and purchases. For many consumers, credit cards are easier to
keep up with than traveler's checks and they're almost universally
accepted now.
Foreign transaction fees charged by credit card issuers will
mean you may pay a little extra for that umbrella drink in the
Caribbean or that Parisian pastry.
Virtually every credit card assesses an international transaction
fee for purchases done outside the 50 states, and that could even
include U.S. territories like Puerto Rico and the U. S. Virgin
Islands. Visa and MasterCard charge a 1% processing fee and most
card-issuing banks add additional fees as well (on top of the 1%
fee levied by MasterCard/Visa).
This fee is generally a percentage of the U.S. Dollar value of
the transaction. So, even if you paid 100 Euros for a meal that
was actually $125 (U.S. Dollars), the foreign transaction fees
will be assessed on the $125 amount.
A March 2007 survey of credit card issuers by
http://www.cardratings.com revealed the following foreign
transaction fees:
American Express - 2%
Bank of America - 3%
Chase - 3%
Citi Bank - 3%
Washington Mutual - 1%
Wells Fargo - 3%
Capital One - No Foreign Transaction Fee
Discover - Rarely accepted overseas so not part of this list
Despite fee hikes in the past year or so, credit cards are often
still the most cost effective payment method for overseas travel,
but you should consider fees when planning your trip and budget
accordingly.
Update: You maybe entitled to a refund of any Foreign Transaction
Fees imposed between Feb 1, 2006 and November 08, 2006. Please
refer to http://www.ccfsettlement.com/.
Bon voyage!
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