Just before the latest credit card bill was signed into law a few months ago, I predicted banks would start charging transaction fees for purchases made through an international company. I hate it when I’m right.
Tacking on a three or four percent surcharge, even when the purchase is in dollars, is unconscionable, of course. But let’s not get drawn into a discussion about whether these banks have a conscience.
Instead, let’s focus on what you can do when you find a foreign transaction fee on a credit card bill.
Here’s what happened to reader Michael Weber:
A few months ago I purchased a round trip ticket from Miami to Hamburg, Germany through Expedia, flying Air Berlin, using my MasterCard from Citibank. In the past I have always used my Amex card.
Subsequently, I found a $27 foreign transaction fee on my statement and not knowing what this was for I called Citibank. They said that whenever a purchase is made from a foreign company, a charge of three percent will be incurred.
When I told them that I paid Expedia, which is a domestic company and not Air Berlin, they said that Expedia is just a middle man and they are paying Air Berlin directly — thus the $27. Unless I have been inattentive in the past I don’t believe I ever paid this fee to American Express.
Am I the last one to know about this fee or is there something wrong here?
Weber decided to fight the charge. He contacted his credit card company and a government site called Helpwithmybank, which helps consumers with their banking problems.
It didn’t take long for Citibank to cave in.
We recently received an inquiry on your behalf from the Comptroller of the Currency regarding the $27 foreign transaction fee assessed to your Citi Platinum Select Card account.
You indicate in your letter that you purchased an AirBerlin ticket via Expedia, which is a company in the United States; however, your account was assessed a 3% foreign transaction fee.
Although I certainly regret any misunderstanding, because the merchant billed the charge to your account from a foreign country, in accordance with the Card Agreement, the fee is considered valid.
However, as a gesture of goodwill, I credited the $27 foreign transaction fee, and this adjustment will appear on a subsequent statement.
How interesting.
So the foreign transaction fee is negotiable. If you complain loud enough, your credit card company will remove it.
I find it interesting that Citi is blaming Expedia for the fee. If Expedia had billed this from an American account, then the fee wouldn’t have been assessed. The last foreign transaction fee case I deal with also involved an Expedia purchase, so maybe the online agency needs to fix something.
Foreign transaction fees ought to be illegal. Until they are, you can fight them one at a time — and win.
(Photo: Andrei Dimofte/Flickr Creative Commons)
✓ Get the latest travel news, tips and commentary from Elliott’s E-Mail, the subversive newsletter from industry gadfly Christopher Elliott. You’ll travel like a pro. Sign up here. It’s free.
Similar Posts:
- The foreign transaction fee nightmare continues — and you could be next
- Credit card bill has an enormous loophole that could hurt travelers
- Two important warnings for Americans using their credit cards in Europe
- Banks, airlines deserve no credit for card tricks
- Credit card charges gone wild: “international transaction fee” added to Puerto Rico purchase
Sign up for my 
{ 3 trackbacks }
{ 30 comments… read them below or add one }
Please note that Citi is not agreeing that they should not charge the fee, only that they don’t want to be troubled by the government and are therefor bribing Michael in dropping the case by giving him his money back.
In my situation with the purchase of a cruise to Alaska, the credit card company didn’t refund the fee, but the cruise agency reimbursed me.
What about the following from the CCF settlement?
In re Currency Conversion Fee Antitrust Litigation (MDL 1409)
Subject to final Court approval, a settlement has been reached in In re Foreign Currency Conversion Fee Antitrust Litigation (MDL 1409). This web site supplies information about the litigation and the settlement, and provides links to relevant documents for Members of the Settlement Classes and others interested in the settlement.
The lawsuit is about the price cardholders of Visa-, MasterCard-, or Diners Club-branded payment cards were charged to make transactions in a foreign currency, or with a foreign merchant, between February 1, 1996 and November 8, 2006. Plaintiffs challenge how the prices of credit and debit/ATM card foreign transactions were set and disclosed, including claims that Visa, MasterCard, their member banks, and Diners Club conspired to set and conceal fees, typically of 1-3% of foreign transactions, and that Visa and MasterCard inflated their base exchange rates before applying these fees. The Defendants include Visa, MasterCard, Diners Club, Bank of America, Bank One/First USA, Chase, Citibank, MBNA, HSBC/Household, and Washington Mutual/Providian. They deny the Plaintiffs’ claims and say they have done nothing wrong, improper, or unlawful.
How ironic. A major financial institution exhbiting protectionist measures. A major financial institution that accepted and still retains government assistance to survive, I might add.
Here’s my question for the lawyers here. Let’s assume a contract includes the customer’s acceptance of a charge which will be levied in certain circumstances (like a foreign currency transaction fee, which will be levied if the transaction takes place in a foreign country or with a foreign entity). And further that it is sometimes (not always) difficult to tell when these circumstances apply. Isn’t the contract unenforceable in those cases? Because the customer hasn’t explicitly agreed to pay the charge in cases where it’s not clear whether the contract wording applies. This sounds like a good issue for a class-action lawsuit.
These new “foreign” fees for pruchases made in in US dollars makes me want to throw up. But they seem to be popping up on all my credit cards (I’m the weirdo who actually reads the changes to terms and conditions when they arrive) so I’m not sure how to avoid.
How about a feature on the most travel friendly credit cards, Chris? :-)
Lianne- this probably isn’t much help but: I’ve lived in the US for three years now and have my salary paid into my US Citibank account but whenever I travel internationally I take the effort to transfer money to my Australian Westpac Visa account because Westpac has really good international terms- there is still a % fee on the Visa but it’s small, and also I can do cash withdrawals from foreign ATMs without ANY fee if I use a partner bank (in the UK, its RBS, in France is BNP in the US its BoA and so on…).
Citibank here in the US charges me a fee even if I use a Citibank ATM in another country, which really annoys me considering they’re a so called international banking entity.
I got a Capital One credit card expressly to avoid foreign transaction fees. My card (platinum) does not come with any major travel protection, unlike some other cards, but it also has no annual fee. I save a bundle every time I travel to Europe and Latin America.
Considering that world travelers might use skype, I thought I would add my 2 cents:
This fee shows up on my card when purchasing skype credit, though when I first started using skype, I did not get charged for this. I have never taken the time to dispute, because it is a 10 cent fee on a 10 dollar purchase, and not worth my time. However, I was a little confused when the fee first started showing up. Has anyone else had experience with this skype fee?
Foreign transaction fees almost certainly ARE illegal as a result of US participation in free trade agreements.
Hmm, they could state on their site the user’s card provider or bank might charge a foreign transaction fee. But I wonder how many people bother to read that detail since very few RTFP (Read The Fine Print) anyway, and not all merchants necessarily know what fees card providers will possibly charge.
Could Lisa please explain what she means by “does not come with any major travel protection.” I also have a CapitalOne card, because it is a no-transaction-fee card, and I wonder what might be “missing.”
M.
The fee itself is certainly outrageous, but I think a lot of the blame may go to Expedia here — when I deal with a US company, I’m assuming they will charge me in US dollars from a US location. If that’s not the case, I expect them to disclose that beforehand, and I can choose to deal with a different company. And boilerplate small print Terms-of-Service like “charges may be from a different country” aren’t sufficient — they need to disclose the actual location for this transaction right next to the total where I click “Purchase”.
There’s no technical reason an online site can’t do this; we should hold their feet to the fire (with lawsuits if necessary) until they do. They’re the only ones who know this information, so not disclosing it is fraud in my opinion.
Oops; clicked submit too soon. One more point:
Note that Expedia et al don’t need to know your specific card agreement to do this; they’re just disclosing what kind of transaction they will send; it’s still up to the consumer to determine what that means to them.
I actually recently stopped using my Citi Mastercard for this very reason and switched to Capital One. The old Citi MC was a 1% cash back, with a 1% transaction fee.
These types of actions irreparably harm consumer good will. Though, given the large sums of money the banks must be collecting as a whole I doubt they’ll cave any time soon. While researching the subject for my Ultimatepackinglist.com website I came across this link/breakdown:
http://www.flyerguide.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange which is a fantastic review of banks and their currency scams.
We planned a three-week cruise/land trip in Paris and Normandy starting April 27, 2009, and realized that with our current credit card, AAdvantage from Citibank, we will be charged 3% for every Euro transaction. With a week of hotels and dining on our own and miscellaneous shopping, that surcharge could be well over $200.00.
Citibank was of no assistance even though the card has been in existence since 1987. Searching the Internet, we found Capital One which, for people with excellent credit which luckily we are, has cards with no annual fee, a 0% rate for the first year, and NO foreign transaction fee. We signed up over the Internet and were instantly approved for a card.
This will be our foreign travel card. Not getting Frequent Flier miles on American Airlines is a small price to pay for saving hundreds of dollars on transactions.
———————-
Just back from a damp but wonderful three weeks in Normandy and Paris. Used the Capital One credit card throughout France and just scanned the bill and was happy to see no foreign exchange charges. Saved about $90.00 so far which will more than pay for the card’s upkeep. I did remember to call their 800 number before leaving to inform them of the foreign transactions that would be appearing. It’s happened to other friends who had trouble with their cards abroad when the U.S. banks gave the foreign vendors trouble with authorizations for purchases. A short phone call to your bank can save difficulty in a foreign land in a foreign language.
The fee issue is the primary reason why I use my CapitalOne card almost exclusively when I travel. I sometimes have to use my Amex when I’m staying in a hotel for a month at a time, but I am able to recover the fee as part of my expense report. Now, I’m just miffed about ATM charges; my old bank charged me a flat $24/year for all ATM transactions not with them regardless of locale, but they were bought out by M&T who charges $5 for foreign ATM withdrawals. I travel in many insecure countries so carrying a lot of cash at any one time makes me nervous.
@Marcus: When I called Capital One to find out what type of travel protection was provided if I paid for a trip with my credit card, they told me I have access only to travel information, but that no insurance, medical evacuation, or such things was provided. I was told there is a higher-level card that usually charges an annual fee which might provide such items, but I haven’t looked into it.
Charles Lichtenwalner (a few posts above this one) noted that he just saved ~$90 on his last overseas trip thanks to Capital One, which would “more than pay for the card’s upkeep.” He might have a card with more perks than mine. Mr. Lichtenwalner, does your Capital One card come with any type of travel protection/insurance?
@ Thomas:
Well…yes. Except now the fees are being disclosed. In the fine print, but disclosed, nonetheless. And I’d just about bet the farm we never see a penny from that CCF suit in our lifetime! You have to know the credit card companies have lawyers who are masters at stalling and filing motions that will drag this thing through the courts for years to come. If we do see a penny, that’s probably about all it will be by then: a penny!
Michael Weber certainly did pay a fee to American Express in the past. It is buried in the transaction instead of broken out like at Citi or Bank of America. It was recently raised from 2% to 2.7%
As to my having a “higher level” card, no, it’s a basic CapitalOne card. Its purpose is to eliminate foreign transaction fees. However, I wouldn’t use it abroad for a transaction which requires “insurance, medical evacuation, or such things.”
How about a 1/4% profit on foreign currency transactions? Try the Pentagon Federal Credit Union Visa card. 1.25% cash back on everything (5% on gasoline, 2% on groceries), and only the 1% Visa fee. I use this exclusively for foreign travel. I am not sure what they do with domestic purchases from foreign companies.
Everyone can join the credit union, one way or another. Maximum cost: One time lifetime $20. Minimum cost $0.
So even though the title of this piece is “How to get rid of a foreign transaction fee on your bill”, my sense is, at best, you can get it reversed only if the transaction was with a US merchant.
Other than using a different credit card altogether, any have any success when calling their credit card company, and getting fees on foreign charges, reversed?
International fees for Skype account ! Purachse of skype credits and and unlimited call to US & Canada (2 separeted transactions). Both were charged with international transaction.
Skype is an USA company since 2006, owned by Ebay and headquartered in San Jose, California !!!
To clear up a little confusion. Mastercard & Visa charge a foreign transaction fee of up to 1% cross border transaction. 0.8% if it is a cross border merchant transacting in your currency….1% if it is a cross border transaction which involves a currency conversion. So, if you find a place not charging you any fee…they are eating it for you, which you should thank them for. Secondly, if you are getting charged a max of 1%…they are simply passing the fee to you, which to me is understandable. The ones that should be challenged are those exceeding the 1%…in which case the financial institution/card issuer is “upcharging” simply to screw you further for profit. those…you should certainly fight tooth & nail.
In Brazil there’s a regulation in which doesn’t matter the international transaction you do, you’ll be charged of more 0,38% over the international debit in your credit card.
Using MC (juniper.com bank) I’ve been charged a 3% transaction fee for skype! This is IN USA, with USD currency, paid by a USA credit card! What a slap in the face! Convert $ to $?? I’ve already filed a complaint with the FTC and plan on contacting the attorney general’s office as well as the bank comptroller. A call to NPR and other news agencies woudn’t hurt either. Please make noise to your local government! This is simply an outrage and highway robbery, once again done by our own banks.
I do have a CapitalOne CC so i’ll try using that next time. Another tip for skype i got from their forum – use paypal.
Heck, i’m only out a few cents, but i’m NOT letting this one go.
When traveling abroad, I use a USAA master card. They charge 1% transaction fee, but their customer service rep told me that they were just passing on the fee they were charged to their customers. Much better that 3% (or higher).
I USED TO USE MY CREDIT CARDS DURING MY TRAVELS BUT NOT ANY MORE. (THE CHARGE FOR CONVERSION)
I USED TO GET AMEX TRAVEL CHECKS FOR NO CHARGE AND SPEND THEM IN EUROPE BUT THE CONVERSION RATES WERE TOO UNFAIR. WHEN I WENT TO AN AMEX OFFICE TO CASH THEM, THERE WAS NO FEE – BUT THE EXCHANGE RATES WERE ABSURDLY HIGH.
NOW I USE MY BANK’S ATM CARD. THEY CHARGE ME NO FEE AND I GET THE BEST EXCHANGE RATE POSSIBLE.
FOLLOW THE MOTTO ON OUR U.S. CURRENCY: “IN GOD WE TRUST”
[OTHERS PAY CASH]
Kinda weird for the guy who got his ticket through Expedia.
I flew recently and booked directly with foreign airlines on their website. EVA Air, in Taiwan, charged my credit card directly and did so in USD. No fees, no phony charges. The ticket price was exactly what they said it was and that was what was on my credit card.