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Beware of Credit Card Foreign Transaction Fee Fever

June 10th, 2009 · 31 Comments · Credit Cards

Meredith Simonds

by Meredith Simonds

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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.

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31 Comments so far ↓

  • No Fee Credit Card

    If you expect to always pay your monthly bill in full, your best choice may be a credit card that has no annual fee and offers a longer grace period.

  • how to fix my credit

    great article, thanks for keeping us updated on how to keep our credit scores in check.

  • Michelle Williams

    I never knew about this – very interesting!

  • Sheri

    Yes, I used my Washington Mutual Mastercard linked to my checking account to book the Westin in Aruba and was charged a Foreign Transaction Fee. It’s a little ridiculous if you ask me.

  • Kristy

    I completely agree.

  • Mike

    Wish i knew before i got charged!

  • Tami

    I used my BOA Visa to pay for a logo contest on a website that is run from Australia. The site faq cleary states that all charges are made in USD…and the exact USD charge did come through on my BOA card…along with a foregin transaction fee. Also, I’d paid for a deifferent logo contest on this site back in April with no fee. After a phone call to BOA cc they did refund that fee, but warned me that next time it will stand due to the new terms.

  • Kristy

    That sounds pretty sneaky and underhanded to me.

  • tlb

    In June 2009, Bank of America charged me a “Foreign Transaction Fee” on the charge for my domain hosting company which is UK based–I’m US based–and then in July I placed an order for books at abebooks for books from a US-based bookseller and was again charged a “Foreign Transaction Fee” because abebooks is based in Canada (something I did not realize). While I was annoyed about the June charge, this most recent charge just infuriates me because the actual bookseller is in the US! From reading various online sites, there appears to be no remedy for this latest banking ploy.

  • Rachel

    Just book a vacation to Yosemite National Park through 1-800-HOTELS (offices in Tampa, Florida and Dublin, Ireland) and was charged a
    Foreign Transaction Fee” from Chase/Washington Mutual. WTF! Why would they use the Dublin location (to my “DEBIT” card no less) for a vacation booked in the U.S. and to a U.S. location? Retarded

  • Jinal Shah

    I got Foreign Transaction Fee charged by BANK OF AMERICA.
    I used my credit card to buy the VOIP Service at http://www.rebtel.com
    Even though this company has charged me the service in DOLLARS, how can BANK OF AMERICA charge me the FTF on this…?

    You won’t believe this but I bought the same service from REBTEL.com during the month of January 2009; On that transaction BANK OF AMERICA did not charge any FTF.

    THEN WHY NOW…?
    I Made this purchase on 8/24/09…and they applied 3% of Transaction FEE on my Purchase….i.e $0.30 on $10.00 Purchase.

    Please do let me know, if you find out any solution to this.

  • jHONNY

    Why this story is not on major media outlets?
    This is purely unethical and dishonest as to change the rule to include Fees to charges that are foreign transactions without doing anything additional as in the past by credit card companies.
    It seems to me that Credit Card companies are charging FTF based on location information of the transaction…..

  • Carol

    I was charged a 3% fee by Bank of America on tickets purchased, in dollars, through the British Airways US website. I could not get the Bank of America rep. I spoke with to concede that 1% was imposed by Visa/Mastercard, the other 2% was the bank. She claimed all banks charge 3%. She did advise me, however, that I only would have paid 1% if I had used my Amex. Good advice, if late in coming. I think that BA has some responsibility here as well and ought to alert purchasers to the possibility of a fee (yes, I know, that’s unlikely, as it would deter Americans from flying BA, but I wrote them a letter, anyway). I am astounded and outraged, like others here.

  • Joe Maloukis

    I have a MasterCard issued from my local credity union (UHCU) for my small business. Starting in July 2009, my MasterCard charges included a $4.50 “International Transaction Fee” for a payment being made to my hosting company in the UK. I have been making this monthly payment for over four years with no “International Transaction Fee”. The payment is made in US dollars. No conversion is taking place. When I called customer service (FIA Card Services) I was basically told that somewhere in the Terms of Agreement fine print is a clause that states that MasterCard can charge me any fee at any time for any reason without my approval, and that’s there’s nothing I can do about it. Well, I did file a complaint with the FTC and sent a to-the-point email to MasterCard. This is legalized robbery.

  • adeline biggs

    I travel to ARUBA twice yearly, in May and September. Upon receiving my VISA credit card bill for May, I noticed a “foreign transaction fee”. I paid my restaurant in US dollars as stated on my receipt and was still charged the fee. I complained to VISA Citicards and after much discussion, they gave me a 50% credit, however after receiving my September bill and seeing the same fee, I just did not persue it. I would assume that somewhere along the line, someone will file a class action suit and perhaps monies will be returned. Just not a fair charge, and I donot like to carry cash in Aruba.

  • Kristy

    I recently traveled outside the country and experience these foreign transaction fees. It sucks to have to pay them, but you kind of make up for the difference because you get the best exchange rate when you use a credit card. If you convert US into local cash, you get the losing end of the stick.

  • Shirley

    I live in Miami and my brother who lived in England passed away suddenly. I purchased tickets on BA.com, at a premium I might add, and now I find my credit card MC is charging me over $100.00 FTF. The fare was quoted in USD on the US website with no warning of extra charges or I would have flown AA, I think that is still an American Company, right?

  • Charles Wetherall

    I just got nicked by this dreaded Foreign Exchange Fee (FEF). I purchased online from Penfield USA in Massachusetts, a jacket for son. Bill: $225USD. When I received my next Citicards bill, I got hit with a $6.75 FEF. No mention of such fee on the ordering page; nor in the email confirmation. I intend to protest. It’s worse than highway robbery.

  • Margot Reps

    The past 3 months someone has been charging on my bank card and then crediting the account once a month to foreign companies. So there are also these foreign transaction charges that don’t get creditted. I never use the card, so don’t know how they stole me card info. The last month the charge twice and there were the FTCs again. No credit this time. I called my bank and they said I probably ordered from a foreign company and should call and make sure-they might be valid charges. I didn’t order skype or internet porne and they are all foreign companies so there goes some more money for me. Something fishy with these tiny fees and charges. Something is happening here!! I’ve closed the account because I suspect it just might be someone at the bank.

  • pmg

    I recently purchased pet medications from Canada because of the pricing and free shipping only to find out Bank of America charged a foreign exchange fee. This is outrageous!

  • Sarah

    I recently received a foreign transaction fee from BANK OF AMERICA VISA for using LAST MINUTE TRAVEL. As far as I can see Last minute travel is a US company based in the US but for some reason they process their transactions in ISRAEL or at least according to Bank of America they do. So I am forced to pay a 3% fee on this transaction without even a warning.

  • natasha

    I was charged this fee twice on Feb – once on pink blossom florist and then again on a unique gifts website.. I shop a lot online, but was never once charged this .. but very disappointed now. I think we may see the resurection of mortar and brick stores and the post office for mailing again

  • Ralph M Stone

    Our law firm is investigating these credit card charges for possible consumer fraud claims that would be brought on a contingency fee basis (i.e., we only get paid if the case succeeds.) We would be interested in speaking with anyone who has incurred one of these outrageous charges. Please do not hesitate to contact us.

    Ralph M. Stone
    Shalov Stone Bonner & Rocco LLP
    485 Seventh Ave., Suite 1000
    New York, NY 10018
    212.239.4340
    lawssb.com

    Attorney Advertising. This message may be construed as attorney advertising in some jurisdictions.

  • Linda

    I had a 3% “foreign transaction fee” added to my M/C invoice by Last Minute Travel in Altamonte Springs, FL.

  • Kirsti

    I also got a 3% charge on my Last Minute Travel charges. Yikes!

  • Erin

    I was charged a 3% “foreign transaction fee” on my Bank of America Visa card for an online purchase of a book from AbeBooks.com through Aliblis. Aliblis has no idea what is going on, AbeBooks says it was Aliblis that did the money transaction and they did not receive anything extra, and Bank of America says it was AbeBooks that charged the fee. According to this site, it seems to be the bank that charged and collected the 3% fee, but their customer service representative did not seem to know what it was when she told me that it was AbeBooks that charged the fee.

  • Mary

    I had 3% charged for transaction from Cymax stores which is in Canada – I called Cymax and they graciously offered to refund the $35 – but the winner here is BofA VISA.

  • Jim

    I charged two business class tickets in US dollars online with British Air. Mastercard charged me the foreign transaction fee and my bank (USAA) said they’re powerless to help. British Airways said there should be no charge since I paid online in US dollars for travel originating in the US. They tell me it’s a credit card ripoff by Mastercard.

  • Tony

    I recently booked a cruise on Celebrity out of Fort Lauderdale through Last Minute Travel and an agency called Tourico Holiday Inc., in Altamonte Springs, Fl 32701.

    LMT shows on my mastercard as being an Israeli operation and Mastercard charged me a 3% fee (around 230$), even though I paid for a US cruise in US dollars.

    I was furious and talked to the mastercard disputes dept. (877-601-8029). The supervisor there told me they get a lot of these complaints now. He removed the charge for me. Much of it originated because of the rise in use of internet pharmacies in Canada and elsewhere.
    I will never deal with Last Minute again and I advise anyone using an online reservation service to specifically ask if they are US-based and whether there are any hidden processing fees.

  • aleksasb

    We are looking into these potential unlawful charges and would be happy to speak to anyone who has received a foreign transaction fee charge.

    Please call Jonathan S. Coleman or Aleksas A. Barauskas at the law firm of Johnson, Pope, Bokor, Ruppel & Burns, LLP, 403 E. Madison St., Suite 400, Tampa, FL 33602, toll-free at 1-800-775-0005.

  • Denise

    Bank of America Visa charged me a Foreign Transaction Fee for an automatic Skype monthly charge in Dollars. I canceled the card.

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