Living with credit

Emily’s foreign transaction fee shock and weekly credit card roundup

Emily Crone

Happy May Day, everyone! Well, I just encountered a frustrating credit card fine print moment. I received a letter in the mail from Bank of America, the issuer of two of my credit cards, notifying me of changes to my credit card agreement. The changes to my reward program were minor and don’t bother me, but I was not pleased to read about a change with foreign transaction fees. I read several months ago that this change was imminent, but was in shock to realize it had actually gone into effect.

Before this letter came, I was only charged a foreign transaction fee when I made purchases in a foreign currency. No biggie; I thwarted this by getting a Capital One card (particularly for my travels abroad), as it is the only issuer that does not charge a foreign transaction fee. But Bank of America is now changing the definition of foreign transactions to include “transactions in U.S. dollars if they are made or processed outside of the United States.” Yikes! This means if I find a UK-based clothing Web site that allows you to pay in dollars, the fees I will pay are no different than if I were paying in Great Britain pounds. I could just use my Cap One for those as well, but what if I don’t know where the transactions are processed? What if I don’t realize the Web site is based in the UK? The fee is only 1 percent of the dollar amount, but I’m still not thrilled. I guess in this credit crunch, the issuers have to make money somehow. Have you experienced any important changes to your credit card agreement lately?

Here are my favorite credit card- and debt-related posts in the blogosphere from the past week. Enjoy!


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  • Emily,
    I got a notice from Bank of America, too, about the foreign transaction fee being expanded to include purchases in U.S. dollars “made or processed outside of the U.S.” My notice said the fee is 3%. You’re right that online shoppers have to ask more questions of retailers about how their payments are processed. If you pay in U.S. dollars and they send the transaction through non-U.S. banks, then you could be hit with an additional fee for the purchase.

  • F. Simmons

    This stinks – it seems as if it would affect ALL military families stationed overseas who bank with Bank of America. BOA is on quite a lot of installations over here. Don’t they know who they are hurting with this?!?

  • tuhl

    Which capial one card would you recommend for
    travel to France?

  • Tuhl,
    Any Cap One card will do — they all have no foreign transaction fee. I only use mine for purchases in foreign currency, so I just got one of the no-frills card with a low interest rate instead of getting a reward program. I’ve had no trouble! Just be sure to call them ahead of time and let them know when and where you’ll be traveling, so they will make sure to note it on your account and not block it for possible fraud charges (expenses in a place you don’t normally go raises a red flag for them).
    Hope this helps!

  • Len

    Can anyone explain, though, if Cap One’s conversion rate is competitive? That is, it’s great they have no foreign transaction fee but if they make up for it by using a less favorable exchange rate than other banks, you could end up paying even more with Cap One. After 3 calls to them, they can’t answer. Visa says that they use the same conversion rate for any bank but each bank can decide to adjust it on their own. VISA doesn’t know what Cap One does and no one at Cap One seems to know either???

  • Carl

    Hi, I didn’t read the fine print but I was aware of the concept of a FTF. I experience when I travel so when I travel I expect to see it on my CC statement. I just got a statement that showed a FTF for a Web purchase in dollars. I had no idea this was going to happen. This is actually debit card, a MC from WAMU/Chase.
    I am in discussions with them now because I want them to tell me how, since they are the ones imposing the charge, I can ALWAYS tell if this charge will be imposed BEFORE I make the charge. So far I have spoken with 6 reps of the bank and had no luck. Any advice on that?
    Also, does anyone know of an example Web site that charges in dollars, but does not disclose location information on the Web site? The bank is saying it is my responsibility to figure out if there will be a FTF on the purchase, and I say if they already know, they should tell me.
    If they can’t tell me before the transaction is made, then I don’t see how they can get away with the charge. Simply saying that these charges may apply doesn’t cut it. It would be one thing if the vendor made the change and it showed up, but it is the bank. I simply don’t see how you can make a chage after the fact. It’s like putting a toll both at the end of one road when there are three to choose from and saying, well because you got on at the begining of this road we can charge you when you get off even thought when you got on the road there was no way to tell which one was the toll road.

  • Simone

    Another displeased BofA customer here. My husband works for the foreign service and is in Africa for 3 weeks. Upon persusing our online credit card statement yesterday I noticed to my dismay an $82.50 foreign transaction fee. This was for the hotel room he is paying for. Although the hotel room was paid for in dollars and not local currency, it does not seem to make a difference. I just got off the phone with BofA after being told that we had been charged 4% on that purchase! I am not a happy camper. If this is how it’s going to be with BofA I will be looking at switching to Capital one for sure. And as a previous poster said, the effect of this will be horrible for military families and in our case foreign service families.