Using A Credit Card To Make Foreign Transactions May Cost You A Little Extra

Credit cards are so popular, nowadays, that it is an automatic gesture to hand in our plastics to make the necessary purchases. In traveling abroad, we often do the same especially when we see a goody buy of souvenirs and mementos that we want to bring home. However, extra care must be made in making foreign purchases with our credit cards for you may find yourself surprised by the numerous foreign currency transaction fees, which if summed up may be a significant amount of money.

Many of the credit card companies do not intentionally hide this information from its users, they just do not stress it. It is usually stipulated in paper how much these companies charge for overseas transactions using credit cards. It is really left to the users to be more mindful or diligent in the intricacies of their credit card services. It will be advisable to plan ahead and check with your credit card provider before you travel abroad and make any purchases.

These unpublicized transaction charges has been the subject of a debate and lawsuit in the past. An anti-trust lawsuit was filed against Visa, MasterCard and Diner’s Club for not properly disclosing these foreign currency exchange transaction fees to the card providers and the users. As a result, the said payment networks made a settlement stipulated in “In re Currency Conversion Fee Antitrust Litigation” (MDL 1409), which allows the card issuers and users to claim settlement money. If you have used your credit card to make payments or purchases abroad from the period from February 1, 1996 to November 8, 2006, you may be eligible to a refund or claim from a legal settlement. You have three options. Two of these oblige you to furnish the necessary billing statements and receipts in order to confirm the amount of your foreign credit card purchases. The third one is the simplest way, which is to file for an Easy Refund claim, which is for those who traveled outside the U.S. for less than a week and made foreign currency payments not less than $2,500 using the aforementioned cards for the period from 1996 to 2006.

How exactly is this foreign currency exchange transaction fee computed? There is a fee percentage paid to two separate entities. The first one is paid to the various payment channels like Visa, Master Card, and American Express, to mention a few of the most widely used ones. The second one is imposed by the card providers like Citibank, Bank of America, HSBC and the likes. A basic benchmark of 1% is charged by Visa and MasterCard on all foreign currency transactions to pay for the conversion of the foreign currency into American money. These payment networks usually charge the card providers, who will in turn impose the expense on its users. Furthermore, banks who issued the Visa and MasterCard add another 2% to the total amount of your foreign purchase. In the past, only Discover Card was the only payment network that does not charge transaction fees for foreign currency transactions but just recently, they have copied the other leading networks. However, the card is unheard of in many parts of the world, which is why it is not widely used.

If you are a frequent traveler and a certified shopaholic, the Capital One credit card is perfect for you because they do not have foreign currency transaction charges. Visa and Master Card do impose a fee percentage to Capital One but the later waived these fees as a means to draw in more customers. You now have the choice between Capital One Visa or Capital One MasterCard, either one will protect you from paying unnecessary fees. Capital One also provides the Capital One No Hassle Miles card where for every dollar you spend, you earn 1,25 miles in credits. In due time, you can easily fly to the country where you can have a shopping holiday.

Since foreign currency transactions are now being scrutinized by diligent users, many credit card companies print these fees in an easy to understand format. They may be denoted by an asterisk so that you may distinguish this fee percentage from your other expenses while others are pretty straightforward by charging the exact amount of the transaction charges imposed by the payment channels and card providers.

Another important thing that you must make note of before you travel abroad is the anti-fraud programs of a number of credit card companies. These companies make use of an advanced fraud detecting program that may cause your credit card purchases to be denied abroad. If you often use your card in your home city, sudden credit card activities from another part of the globe may be suspected by the anti-fraud program. A simple phone call or e-mail to your card provider will remedy this inconvenience.

(0) Comments Permalink