foreign currency fees - a rip-off!

[Myrna]

I want to rant about credit cards charging exorbitant fees on foreign currency transactions.

For example, for our overseas trips we often booked car hire and hotels using credit cards (Amex and Mastercard). I have discovered that the exchange rates they gave were sometimes worse than the CBA retail rates, and on top of these they charged 2.5% fee on the conversion. We complained when we bought foreign currencies from the CBA and had to pay 1% commission. But, having to pay 2.5% conversion fees is a big rip-off.

I would like to hear your suggestions on what would be cost effective ways of paying for foreign currencies using credit cards?

 

[Nutcase]

Option 1 - Wizard Clear advantage Master card - No FX fees

Option 2 - Earth Cards 1-1.5% FX charge (correct me if Im wrong)

The market norm for this is 2.5%, however you will find fees as high as 3.4% with citibank.

All credit cards (except for the Wizard) charge this fee. Its only been in the last couple of years that it has been transparent. This was due to consumer backlash in the US and NZ.

Regrettably, the fee is not negotiable. I have called AMEX and requested this on more than one occasion.

I did a deal in a previous life where the fx fee was negotiated with a large multi-national on their corporate card program but the spend in USD was huge.

Has anyone had any luck with getting their bank/cc company to budge on this one?

 

[oz_mark]

There is not much that can be done about the exchange rate itself. As far as I am aware the conversion is done by the credit card company itself (Visa/MasterCard/Amex). In my experience, though, the exchange rate has generally been what I expect.

On top of that, there are fees that the scheme charges to the bank (a conversion fee), and then the bank has its own fee. Not really much scope for negotiation on the scheme charged fees (although I understand Wizard credit this back).

 

[Travel Guru]

I haven't, but even with the FX fee it still works out cheaper than using something like a Cash Passport from Travelex who's exchange rate is so much worse than the card providers so I just don't think about it anymore.

TG

 

[Nutcase]

Agreed.

Like most things in financial services, someone ends up paying for it somewhere along the line. My advice is just to cop it on the chin and enjoy the journey.

The only way around it is the Wizard card, however there are some small irritations even with that card. Customer service seems a little slap dash sometimes as one example. The feedback is mixed on this product.

 

[drron]

I haven't, but even with the FX fee it still works out cheaper than using something like a Cash Passport from Travelex who's exchange rate is so much worse than the card providers so I just don't think about it anymore.

TG

Yes at SYD on Monday Travelex were quoting 99.9 cents when buying US notes-nearly made parity!Unfortunately the wrong way round for us.

 

[Arthur Hodgson]

Just buy CBA TC's in Oz with your gold card.

A good exchange rate and no fees. And you can convert them to cash (indeed, they are cash in the US) at many banks in your destination country for no fee either (just don't try Brasil!).

 

[pksw]

Just buy CBA TC's in Oz with your gold card.

A good exchange rate and no fees. And you can convert them to cash (indeed, they are cash in the US) at many banks in your destination country for no fee either (just don't try Brasil!).

Are you sure about that? My understanding was that you could get TC fee free at the CBA, but only in $AUD. So when you turn up to some overseas banks with $AUD they can charge an international transaction fee (as well as a counter fee).

I stopped using TC because of this, plus the inconvenience of trying to find banks overseas that would accept $AUD. I guess it may depend on where you travel.

Since then, I applied for a Wizard card, and will be using that for all future CC transactions, and the second Wizard card (my wife's) will be used to withdraw money out of ATMs. Of course we'll load the card up with some cash first.

 

[kpc]

I would like to hear your suggestions on what would be cost effective ways of paying for foreign currencies using credit cards?

The Wizard MC is your answer:idea:. See this post of mine;The Australian Frequent Flyer Online Community - View Single Post - Best card for travelling overseas?
Apart from the countries mentioned in the above thread, you can add US, UK, Thailand to the countries that I've used it without any problems (either as a credit card or to withdraw cash after putting the card into +ve balance). I also use it when I buy stuff in foreign currencies over the internet. Karl Marden use to say about AMEX: "Don't leave home without it:!:". My philosophy is "Don't go overseas without the Wizard:!:.

Unsubtantiated rumours, however, are that the Wizard's lack of Fx fees may not last forever...

The only way around it is the Wizard card, however there are some small irritations even with that card. Customer service seems a little slap dash sometimes as one example. The feedback is mixed on this product.

In my experience, they are very minor irritations that I can live with so long as they don't charge any Fx fees!

 

[JohnK]

The latest fiasco with Citibank charging 5% commission on foreign currency transactions has really got me thinking about the best approach although I am yet to be convinced that Wizard Mastercard is the answer. Perhaps a trial is necessary for me to see the actual results as that would be the best indication. Just on AFF alone I have found that there are serious discrepancies with people using different banks and even with people using the same bank and product.

As I spend a fair amount of time in Thailand every year I may end up opening an ATM account over there and deposit cash into the account on every trip. This would ensure that I get the best possible cash rates and do not have to worry about bank charges. What to do with other countries? I guess continue with the current practice of carrying cash until it becomes an issue.

I have less faith in banks everyday. Just when you think they can't get any lower....

 

[coco50]

I haven't, but even with the FX fee it still works out cheaper than using something like a Cash Passport from Travelex who's exchange rate is so much worse than the card providers so I just don't think about it anymore.

TG

Yeah. This is true of Cash Passport - I wouldn't have one. However the online rates for buying FX from Travelex are pretty good. I have bought plenty of Euro @ 0.62/A$ and USD @ 0.92/A$ this year in prep for a trip to those areas. The only downside - you have to carry cash and thus have less security. I guess that banks chrage fees and conversion charges to make this market - if you want security you have to pay for it. There is the option of opening up a multi currency account with a bank such as Westpac, but even here they discount the retail rate by about 80 basis points

 

[clifford]

As I spend a fair of time in Thailand every year I may end up opening an ATM account over there and deposit cash into the account on every trip. This would ensure that I get the best possible cash rates and do not have to worry about bank charges.

It works for me. I have an account with a major bank in the UK, and make use of it whenever I'm over there (several times a year).

 

[clifford]

Are you sure about that? My understanding was that you could get TC fee free at the CBA, but only in $AUD. So when you turn up to some overseas banks with $AUD they can charge an international transaction fee (as well as a counter fee).

Yes, Arthur was correct on this. I too have a CBA gold Visa card and get t/c's, in any denomination that is available, completely free of commission.

Earlier this week I purchased a number of (American Express) t/c's in GBP from CBA, and the exchange rate was .475, with absolutely no other fees whatsoever.

You can exchange these t/c's completely free of charge at many banks throughout the length and breadth of the UK (the same applies to Euro t/c's on the continent). Just check the Amex website for details.

 

[pksw]

Yes, Arthur was correct on this. I too have a CBA gold Visa card and get t/c's, in any denomination that is available, completely free of commission.

Earlier this week I purchased a number of (American Express) t/c's in GBP from CBA, and the exchange rate was .475, with absolutely no other fees whatsoever.

You can exchange these t/c's completely free of charge at many banks throughout the length and breadth of the UK (the same applies to Euro t/c's on the continent). Just check the Amex website for details.

That's good to know - however I'll keep the wizard card anyway!

 

[Chicken]

I too have a CBA gold Visa card and get t/c's, in any denomination that is available, completely free of commission.

I don't believe there is free lunch. Exchange rate for American Express travellers' checks are always worse than cash and Visa / MasterCard, which in turn is worse than wholesale rates from Visa/MC.

For example, I just tried to order some EUR in cash and checks, on CommBank web site, and EUR1500 is $2589.30 cash or $2543.78 checks.

XE.com is showing EUR$1500 = $2445.30

back on topic, this is what I am doing now.

If I want to use credit card, I use my Earth+ and pay that 1% commission from MasterCard (although MasterCard is not as widely accepted as Visa in some countries). If I want to draw cash from ATM, I find a HSBC ATM, then draw from my HSBC card, which has no commission at all when you use any HSBC ATM worldwide.

 

[kpc]

If I want to draw cash from ATM, I find a HSBC ATM, then draw from my HSBC card, which has no commission at all when you use any HSBC ATM worldwide.

I didn't know that:!::idea: I thought you still had to pay $5 withdrawal fees as you are withdrawing from an overseas ATM...good to know as I have a HSBC ATM card.

 

[Chicken]

I didn't know that:!::idea: I thought you still had to pay $5 withdrawal fees as you are withdrawing from an overseas ATM...good to know as I have a HSBC ATM card.

Yes, that is a AUD$4.5 withdrawal fee if you use an ATM outside Australia, but you do not need to pay commission if the ATM overseas is also HSBC, just that $4.50, or only 1.1% if it is Cirrus, which is acceptable.

I made 95% of all my withdrawals in UK and France using HSBC ATMs during my last trip, then check my statement after, compared them with XE.com, and XE was coming back with commission of between 0.8% - 1%, which I think maybe due to different wholesale prices HSBC got, but is really close enough that I think I can ignore statistically.

 

[JohnK]

Yes, that is a AUD$4.5 withdrawal fee if you use an ATM outside Australia, but you do not need to pay commission if the ATM overseas is also HSBC, just that $4.50, or only 1.1% if it is Cirrus, which is acceptable.

Where is this specifically mentioned? Are you referring to a HSBC credit card? From the HSBC website on credit card Fees and Charges.

International charges
[FONT=Times New Roman,Times New Roman]• Overseas transaction charge – 2.0% of the [/FONT][FONT=Times New Roman,Times New Roman]payable when you make a transaction total value on your account in a currency other amount of than Australian dollars, or you make a each such transaction on your account in any transaction currency (including AUD) that is processed by the card scheme or billed by the merchant outside of Australia [/FONT]

Other charges
• Cash advance usage charge – per activity
the higher of $2.50 or 2% of the total cash advance amount
• Foreign currency conversion 1.5% of the [FONT=Times New Roman,Times New Roman]charge for payments made in Australian dollar foreign currencies amount of each payment [/FONT]

I only have the standard Earth credit cards, not Earth+, and after reading the fine print I am not even going to attempt to put any foreign currency transcations through the card. I get the impression that the commission will be higher than the actual transaction amount.

Plus anyone that can actually reconcile foreign currency amounts on their credit card statement is doing great. If I can get even remotely close after taking into consideration a 2.5% commission then I am relatively happy....

 

[Chicken]

Where is this specifically mentioned? Are you referring to a HSBC credit card? From the HSBC website on credit card Fees and Charges.

Not credit card, just normal ATM card. Refer page 5 of http://www.hsbc.com.au/1/PA_1_2_S5/content/australia/common/pdf/personal/fees-charges.pdf

I only have the standard Earth credit cards, not Earth+, and after reading the fine print I am not even going to attempt to put any foreign currency transcations through the card. I get the impression that the commission will be higher than the actual transaction amount.

Refer earth - Features of Earth . From bottom of that page:

You will be charged 1% on purchases made using your Earth+ MasterCard Card and 1.5% on purchases made using your Earth+. American Express Card

Plus anyone that can actually reconcile foreign currency amounts on their credit card statement is doing great. If I can get even remotely close after taking into consideration a 2.5% commission then I am relatively happy....

I did check my HSBC ATM card, and also Earth+, and what they claim are really really close to the % XE.com guesses. Westpac even lists the total commission I got charged by MasterCard for that period.

 

[medhead]

If I want to draw cash from ATM, I find a HSBC ATM, then draw from my HSBC card, which has no commission at all when you use any HSBC ATM worldwide.

I'm in the fortunate position of a loan package with NAB. I have no fees for using ATMs under that package. That is any ATM including while overseas.

So my recent european vacation I only used cash. The statements confirm that I got about the advertised TT exchange rate with no other fees for all withdrawals. This was even the case in Hungary in 2005.

Otherwise I prepaid expenses like carhire and hotels. So avoided the CC fees.

Not everyone will have loan package with NAB, but they now have something called NAB gold banking which seems to offer similar fee free ATM usage.