Short-term tourist car leases
If you travel with a Visa, MasterCard, American Express, or other credit card, watch out when charging purchases overseas.
The reason: Most U.S. and Canadian credit-card companies are now tacking an extra 2% to 5% fee on international transactions.
This is not a currency-exchange commission, because the Visa/MasterCard clearinghouse has already taken its commission (currently 1%) when converting your transaction from foreign currency into U.S. or Canadian dollars. Instead, it's just another way for the credit-card issuer to squeeze extra profits out of customers who may not be aware of the added fees.
We learned about this trick back a number of years ago when we received a mailing from FirstUSA, where we had a Visa account. FirstUSA announced that it would add a 2% charge to the dollar amounts reported by Visa and MasterCard for transactions converted from foreign currencies.
Cheryl, our family financier, was shocked by the announced charge and decided to do some investigation. She called First Card, a major Midwestern credit-card supplier, and learned that it added 3% to such transactions. Next, she called USAA and Capital One. Neither of those U.S. companies added a fee at that time (although USAA now imposes a 1% fee after years of self-restraint).
More recently, the Washington Post reported that Providian National Bank is adding 4% to purchases in currencies other than U.S. dollars. Chase and Citibank had 2% surcharges the last time I checked. American Express, which isn't affiliated with Visa or MasterCard, has been charging 2% but may have raised its rate to 2.7% by the time you read this.
Watch for the double whammy
Let's say you've bought an item in Paris and charged it to your Visa or MasterCard. You take it back to the hotel, find that it doesn't fit or doesn't work, and return it to the store.
The shopkeeper now issues a credit in euros. Visa or MasterCard converts the credit into dollars (taking a modest commission) and passes the dollar amount on to your credit-card company. Your credit-card company may then impose a surcharge on the credit. In other words, you're gouged twice: first with the 2% to 5% surcharge on the original purchase, and again with a 2% to 5% surcharge on the store's refund.
A new culprit: the "cross-border transaction fee"
Your credit-card company may be gouging you with a new surcharge wrinkle: the "cross-border transaction fee," which applies to foreign transactions in your own currency.
For example, if you're an American and you charge US $1,000 in onboard charges and purchases aboard a cruise ship, the credit-card company may pad the bill by another $20-30 just because the ship was outside of U.S. waters.
Canadians may take an extra hit
D.G. Smitty, a reader from Canada, e-mailed us a while back to report:
How to avoid surcharges
Also beware of hidden ATM fees
Another ripoff: Merchant fees
Photo copyright © Visa. Used by permission.
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