WHAT
EVERY TRAVELER NEEDS TO KNOW ABOUT
FOREIGN TRANSACTION FEES
by Ariel James
Have you ever noticed the Foreign Transaction
Fees that appear on your credit card or bank statements
when you return from a trip to another country? These
charges will depend on what bank you use. Most major
banks, such as Bank of America, Chase, and CitiBank
charge three percent on each and every purchase made
outside the United States with a debit or credit card.
Instead of paying with a debit or credit card, some
travelers think it's easier to get quick cash from an
ATM, but think again. With U.S. banks like Wells Fargo
charging a flat fee of $5 for each withdrawal, or Wachovia,
which charges one percent of foreign purchases plus
a non-Wachovia bank network fee, these charges can add
up. It's wiser, and cheaper, to take out larger amounts
at ATMs instead of smaller ones. If you are a frequent
traveler, you may also want to consider switching to
a bank that gives you a better rate. Currently, HSBC
has the best foreign transaction fee rate, charging
only one percent on credit and debit card purchases
and $1.50 at non-HSBC ATMs.
Travelers should also be aware of Dynamic Currency
Conversion (DCC). This allows a foreign merchant
to convert your bill from foreign currency to U.S. dollars
using their own rates. DCC is only used with Visa and
MasterCard. American Express charges 2.5 percent per
day for foreign transaction fees and they do not charge
cardholders DCC rates. If a merchant says that they
will charge you DCC rates with an Amex, this is impossible.
The fee for DCC ranges between 3–10 percent depending
on the fee charged by the technology partner and the
fee charged by the bank issuing the debit/credit card.
If you check your statement online the day of the purchase
and see that the merchant's rates were a bit too high
for that day, you should call your credit card company
and request that your purchase be voided and charged
again in the local currency. Your credit card's exchange
rates could be cheaper.
Always ask if you are going to be charged in local currency
or U.S. dollars before making your purchase. If the
cashier tells you that they will charge DCC rates, and
you don't want them to, tell them that you don't want
to be billed in U.S. dollars. If the cashier says that
they can't reverse the charge, ask for the manager.
FOREIGN FEES CHARGED BY SOME OF THE MAJOR BANKS
Here is a summary of
the fees charged by some of the major banks at press
time. Before opening an account, make sure to inquire
as to what the current fees are and if they are likely
to change any time soon. Without proper federal regulations,
banks are free to charge what they like, and to change
these fees with little or no advance notice to their
customers.
Bank of America
• 3% for credit/debit card purchases
• $5 and 1% at ATMs; fee waived if using Global
ATM Alliance machine
Chase
• 3% for credit/debit card purchases
• 3% of ATM withdrawals
Citibank
• 3% for credit/debit card purchases
• 3% at non-Citibank ATMs
• Will reimburse ATM fees if you applied for a
checking account online
HSBC
• 1% for credit/debit card purchases
• $1.50 max for ATM fee
Wachovia
• 1% of credit/debit card purchases
• 1% of ATM withdrawal PLUS network fee
Washington Mutual
• 1% of credit/debit card purchases
• 3% of ATM withdrawal PLUS 1% charged by
Master Card and Visa
Wells Fargo
• 3% credit/debit purchases
• $5/withdrawal at ATM
[Published:
February, 2008]
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