July 27, 2005
More credit card fees for foreign purchases
WSJ.com - Using Plastic Abroad Gets PricierThe higher fees for using credit cards come at a time when card companies, banks and merchants are battling over who gets to charge for making the currency exchange. In an abrupt turnaround, Visa suspended its earlier decision in April to charge a 1% fee on all overseas transactions, including those purchases where the merchant already had converted the currency to U.S. dollars. Instead, the company will charge the fee only on transactions where it converts cardholders' purchases into U.S. currency.
Visa says it also will refund card issuers the 1% that it charged on foreign transactions that were converted to dollars by the merchants. Whether credit cards will pass those savings along to cardholders depends on the issuer.
The move, which took effect June 9 but wasn't publicly announced, means consumers may have an incentive to use Visa over MasterCard-branded cards beginning this fall when making a purchase at foreign merchants that allow travelers to convert their purchases into dollars.
That is because, starting Oct. 1, MasterCard plans to charge issuers a 0.8% fee on all cross-border transactions -- whether in dollars or a foreign currency -- and an additional 0.2% whenever they convert the purchase. A spokeswoman for MasterCard says the company still plans to proceed with these changes.
There are very few credit cards that charge nothing for converting your foreign purchases into dollars. Some banks, such as Wells Fargo & Co. and Citigroup Inc.'s Citibank unit, say their 3% foreign exchange fee (which includes the 1% charged to the banks by Visa and MasterCard) applies only to purchases made in a foreign currency and converted to U.S. dollars by Visa or MasterCard.
More credit card fees. Great
Posted by TY at July 27, 2005 12:39 AM
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