How to get rid of a foreign transaction fee on your bill

By | August 11th, 2009

air berlinJust 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)

  • It’s infuriating all of the ways these big banks find to scam their customers. 

  • Scapel

    I had this happen to me. I booked a $9000 trip to Antarctica out of Punta Arenas, Chile and made the transaction in US dollars. The credit card then made a $189 foreign transaction fee. I stated that I had made the transaction in USD, but they stated that it was made in a foreign country. They stated that they had notified me of this change two months previously. The credit card company did credit the $189 back. I remember when credit cards did not even make currency conversion charges.
    Well, I found Captial one Credit cards that don’t make foreign transaction fees and don’t make currency conversion charges either.
    Get a Capital One credit card either Visa or Mastercard. I have one of each.

  • Discover and American Express do not charge foreign transaction fees. Discover eliminated their 2% foreign currency/transaction fees in November 2011, although international acceptance is limited to some European countries, Japan and China, but this seems to be growing since they now own the Diners Club International network.

    American Express issued Amex cards do not charge for foreign USD transactions, but will charge if in non-USD with the exception of the Platinum and Centurion cards. If your Amex is issued by a bank (FIA, Citi, Macy’s or PenFed, check your terms).

  • Are you using the Fidelity Visa? This card has always had a 3% foreign transaction fee. The Fidelity Rewards Amex has a 1% foreign currency fee (applied only for non-USD transactions). Of course, Visa card acceptance is an advantage over Amex. In that case, I use a Capital One Visa.

  • TTopGun

    Very very very bad and very very very backward financial services from banks and totally criminal as one can never really know if they have incurred the fee in advance as websites are not definitively geographical.

    All in all this most probably has something to do with protecting those billion dollar companies monopoly on Chinese slave labour as e-commerce is more accessible to the small guy, free market, while those big campaign contributors have plenty of walk in stores full of China goods.

  • Kevkev12

    Probably he bought ticket from Expedia Canada website. If we purchase from foreign website, credit card company will charge foreign transaction fee.
    My friend booked car rental from expedia but he wasn’t aware that google directed him to Expedia Canada website, so he ended up to pay 3% foreign transaction fee.

  • stevenyc

    I was charged a foreign transaction fee and I didn’t even make any foreign transactions, only a balance transfer from Chase bank to Citibank!!!! I guess the 3% transaction fee wasn’t enough. Greedy bastards!

  • J

    Same thing happened to me in 2011. I ordered airline tickets through British Airways US website, and Citibank charged me 3% foreign transaction fee, and British Airways told me their New York office charged my credit card, not UK office. So I called Citibank and told them I would file a complain to U.S. Department of the Treasury website mentioned in the article, and they gave me refund.

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