Bank of America Hits U.S. Online Shoppers with Foreign Fees

[RamboLiberal]

In case you had any doubts that credit card firms would find ways to make up for revenue lost through recent reforms passed by Congress, let me put them to rest. Online shoppers take note: It's now possible that you'll be charged a foreign transaction fee on some purchases without ever leaving the U.S.

Bil Corry of Indiana spotted the new fee while carefully reading mail from Bank of America recently. Corry is an Internet Age consumer. He shops online and doesn't limit himself to U.S. companies. By shopping around the planet, he can save a little money. He buys Web- hosting services from a company in Amsterdam and registers domains with a company in France. But soon, Bank of America will be eating into those discounts. Corry recently received a letter saying the bank would help itself to 2 percent of each transaction he had with a foreign company -- even if he never leaves the U.S. and even if the transaction is completed in U.S. dollars.

There's nothing new about credit card firms carving themselves a big chunk of change from foreign travelers. Starting in 2005, overseas vacationers and business travelers noticed their monthly statements were peppered with these fees, which can add as much as $4 to every $100 stay at a hotel. But foreign transaction fees date back to the previous decade, when card issuers hid them in currency conversion calculations, baking an extra cut into their exchange rates. An epic class-action lawsuit followed, and the credit card associations were ordered to issue a whopping $800 million in refunds. Banks also were ordered to change their ways – the fees must now be clearly spelled out on billing statements. It's too late to claim any refund money, but you can learn more here: http://www.ccfsettlement.com/

The rationale behind the foreign transaction fee is this: The bank had to pay for currency conversion and also do some fancy accounting work. But for that reasoning to hold up, consumers must literally be overseas and literally buy things in other currencies. Well, forget that.

http://redtape.msnbc.com/2009/05/currency-conversion-fee-hits-us-shoppers.html

[matt819]

1. This isn't new

I purchase products from overseas regularly, and Master Card charges a cross border fee of .08%. So, for a $100 purchase, the additional charge is $.80. It sucks, but I can live with it. The other option for me to get money overseas is to send a foreign wire, which costs $40 at my bank, regardless of the value of the wire. You want to see where the credit card companies are going to make up any reductions due to the credit card bill? Look at the discount rates they charge businesses.

[Joanne98]

2. The vampires always win.

[Oregone]

3. I never heard of this happening when the currency involved is actually USD

That doesn't seem right.

Love em or hate em, Capital One waives all types of foreign transaction fees. Its how I "exchange" currency.

[SheilaT]

4. In 2001 we made a trip to Australia,

and I learned after getting back home and receiving my credit card bills, that American Express charged no additional fees on the money exchanges, unlike Master Card and Visa. Have no idea if Amex is still so nice, since I haven't shopped overseas since then.

Yes, Amex charges a yearly fee, but if you pay it off every month they don't hold it against you.

[Wednesdays]

5. K&R

:kick: