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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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.
great article, thanks for keeping us updated on how to keep our credit scores in check.
I never knew about this – very interesting!
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.
I completely agree.
Wish i knew before i got charged!
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.
That sounds pretty sneaky and underhanded to me.
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.
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
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.
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…..
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.
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.
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.
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.