May 6, 2009
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News: CC Overseas Costing More
Travelers will be paying more to use their credit cards if they are making purchases overseas. Many have already experienced the surprise fee increases after returning home to find an additional charge on their card statements. In 2008, American Express raised their fee from 2% to 2.7% and most recently Discover Financial Services also began charging the fee. It is expected that Bank of America Corp customers will begin getting charged the fee beginning in June. In addition to the fee charged by the card provider, Visa and MasterCard charge a 1% foreign currency exchange fee which is often passed on to the end consumer. In light of the fact that the fees have been charged against transactions made in foreign currency, many travelers attempted to avoid it by shopping at foreign retailers that charged the U.S. dollar. Other consumers used credit cards that offered the benefit of not charging the fee; however banks aren’t willing to let that revenue go any longer. Citibank recently announced they have changed their terms and conditions to impose a 3% transaction fee on any foreign transaction. The Toronto-Dominion Bank has also indicated that they will be converting their credit cards that did not charge the exchange fee to new cards that charge a 3% fee on all foreign transactions.
Not only will the new fees affect all transactions conducted overseas, it will also include all foreign transactions processed on the internet. When consumers began noticing some of the discrepancies between fees on their credit card statements, they questioned their lender only to be told they should read their contracts. Consumers have already been in an outrage as they have seen their credit limits slashed and interest rates climb. Massive complaints to lawmakers’ offices spurred the proposal of a bundle of credit card reform bills. Major legislation aimed at stopping the deceptive and unfair practices of lenders is expected to be signed into law by week’s end; however, the new bill does not have provisions pertaining to these fees.
Consumers traveling overseas have another option; Abbey has re-launched their fee free credit card. Abbey has strategically timed the re-launch at time when many consumers will be traveling for summer holidays. The card also offers a zero percent balance transfer fee for the first 12 months.