My MBNA card just announced that it, too, is going to soon charge
that usurious 3-percent fee on foreign money credit card purchases.
Are there any banks or credit companies that will buck the trend
and not charge us for charging outside the country? Thanks.
-- Baron Bucks
MBNA is increasing its currency conversion fee
in May from 1 percent to 3 percent. A USA
Today article has more on the changes in this card and others,
including some cautions about why you shouldn't use dynamic currency
conversions, or DCC, when buying items abroad.
The credit card companies and provider banks got into
legal trouble a couple of years ago by not adequately disclosing
currency-conversion fees. The legal wrangling isn't over, but the
fees are now disclosed and consumers are trying to find a way around
paying them. The key is that Visa and MasterCard charge issuing
banks the fee, and the issuing banks then typically pass through
this fee to customers and add to it an additional fee of their own.
Here's what Visa says on its Web site concerning these
Effective April 1, Visa will assess a 1% International Service
Assessment (ISA). The ISA is not a currency conversion fee but
rather a charge to issuing banks when transactions use the global
payment system. The ISA will also be charged to Issuers on same
currency, cross-border transactions like DCC. Visa will no longer
charge issuing banks the 1% Multicurrency conversion fee. It is
important to note that Issuing banks determine the cardholder
pricing structure. Some banks charge mark-ups for same-currency
cross-border transactions; others do not. If you frequently travel
internationally, the different pricing structures charged by issuing
banks should be one of the factors you take into consideration
when you select the Visa card that best suits your needs.
MasterCard has similar provisions that will take effect in October.
Finding a financial institution that doesn't pass through the
ISA charge is unrealistic, but finding a financial institution
that doesn't tack on any additional fees shouldn't be impossible.
Check back with this site. Bankrate is working on a story about
currency conversion fees that will include a chart listing the
cards that do and do not include the fee.
you are a member of a credit union, or qualify to join a credit union, ask that
institution what they charge for currency conversion fees on their credit cards.
argument for still using the credit card is that you're getting an exchange rate
not available in retail currency transactions and you're not paying as high a
service charge as you would experience in exchanging currency at an airport or
Using a debit card may be a lower-cost alternative
to using your credit card, but you need to compare the currency
surcharges on these transactions and consider any ATM surcharges