If it sounds like a new strain of flu that you need to avoid, you are right on target!
For years, most banks have charged consumers a fee for using their credit cards overseas if the purchases were made in a foreign currency. These fees were almost exclusively associated with an actual trip that (yours truly) participated in – relaxing, having fun, enjoying a vacation in a foreign country, while paying a fee for the conversion of currency and the convenience and safety of using a major credit card rather than carrying cash. In other words, a “semi-justifiable” fee, or at least one that consumers were willing to stomach, possibly due to vacation hangover.
But the latest trend is disturbing, as you don’t even have to leave home to pay a foreign transaction fee. Online shoppers? Beware, shopping online with merchants that aren’t based in the U.S., or booking flights or hotels with international companies may soon result in additional fees of 2% or more.
A reader recently shared this bit of fine print received in the mail from her Bank of America credit card account. Read it and weep:
Amendment to Your Credit Card Agreement:
Effective on June 1, 2009, we are replacing the definition of “Foreign Transactions” in the section of your agreement titled Words Used Often in this Agreement with the following:
“Foreign Transaction” means any transaction made in a foreign currency, and any transaction made in U.S. dollars if the transaction is made or processed outside of the United States. Foreign transactions include, for example, online purchases from foreign merchants.
Apparently, the Credit Card Accountability Responsibility and Disclosure Act of 2009 has a bit of a loophole with some vague language regarding these fees. Combine this with the rising delinquencies, economic crisis and every other bit of bad financial news for banks, it is no surprise that they are seeking every possible avenue to squeeze in other dollar from consumers to offset their losses.
What can you do? Find out the fee policy on your credit cards before traveling outside of the U.S. borders, as well as making any purchases from foreign-based companies. Clearly, the government needs clarification regarding the definition of a “foreign exchange fee” or transaction, or the upshot is that consumers could be paying these fees for a myriad of common purchases that were not subject to these fees in the past.
Readers, has anyone been caught unaware with one of these new fees? Please share your experience if you have by leaving a comment.