lower intntl transaction fees on credit card purchases?

[greatkid1985]

Hi,

I make alot of international purchases using my credit card, but I always get a hefty "international transaction fee" on my credit card statement, which occurs when my credit card company has to concert australian dollars into US dollars, or whatever other currency i am making payment with.

Does anyone know of any australian credit card company that doesnt charge these conversion fees? or might have lower fees? Right now i am with commonwealth and they charge a 1.5% fee for this. I know it doesnt seem like much, but alot of the purchases i make are very large like over $1,000 and this fee adds up to be quite alot at the end of each month.

Cheers,
Chris

 

[NM]

Believe it or not, I have found Amex to be very competative for foreign transactions, especially when comparing with my Comm Bank Visa Card.

All credit cards charge a fee for foreign currency transactions.

When travelling overseas, I now use a CitiBank Readycredit facility for ATM cash withdrawals with no fee. But as this is not a credit card, it may not be of any use for your situation.

 

[Guest]

ditch the combank card for starters...I second NM's idea if you are just looking for the cash overseas.. but if you're constantly purchasing cough subscriptions online in USD... go with a differnt bank and you'll never notice the additional fees :twisted:

 

[aspro2]

All credit cards charge a fee for foreign currency transactions.

Almost all. The Wizard Mastercard has no transaction fees, except for cash withdrawals, and the exchange rate (claimed to be at wholesale rates) is just under 1% worse than the interbank rate listed on oanda.com for a given date. (Based on experiences in the last three months.)

Of course, the card offers no points/miles/frills/chocolates

 

[NM]

Of course, the card offers no points/miles/frills/chocolates

Then what's the point in such a card .

 

[neil_gardner]

Wizard MasterCard is great if you pre-pay your own money onto the card.

No fees for cash advances or purchases....only pay interest if you use their money, not yours

 

[markis10]

Had the option in Singapore last week of paying in AUD on my card and took it, compared to the purchases I did where it was not offered it seemed to be cheaper, have not experienced having a choice before in Singapore or any other country for that matter!

 

[Sheriff]

The only way to avoid paying foreign currency transaction fees is to pay cash.

Remember foreign currency transaction fees can be very hefty especially for purchases/cash advances made in currencies other than United States dollars because the bank first converts into US dollars and then further converts into Australian dollars.Fees for large foreign currency transactions which involve two coversion rates really add up !

 

[aspro2]

The only way to avoid paying foreign currency transaction fees is to pay cash.

Remember foreign currency transaction fees can be very hefty especially for purchases/cash advances made in currencies other than United States dollars because the bank first converts into US dollars and then further converts into Australian dollars.Fees for large foreign currency transactions which involve two coversion rates really add up !

Correct me if I'm wrong, but isn't it MC and Amex which do the xx_>USD>YYY conversion, while Visa just goes xx_>YYY ?

I think we need to be careful about "foreign currency transaction fees" -- on the one hand there are the fees which are disclosed by the card company, and then for some cards/banks there is simply the margin applied to the interbank rate, which is never disclosed as a fee. There are certainly some cards (such as the Wizard Mastercard and many debit cards) which do not charge a specified forex fee.

 

[Sheriff]

Correct me if I'm wrong, but isn't it MC and Amex which do the xx_>USD>YYY conversion, while Visa just goes xx_>YYY ?

All credit card foreign currency transactions I've made have been first converted to US dollars then converted to Australian dollars.

Even if Visa goes xx_>YYY , which I very much doubt, the transaction fees will be comparable to xx_>USD>YYY because the USD is widely used by Australian banks as a benchmark in foreign currency credit card transactions.[/quote]

 

[NM]

Even if the transaction is via US$, you still only get charged the exchange fee once. I have not found this practice to be unfare or more expensive since it was introduced by some card processors last year. As with any excahange rate, some days you win, some days you lose.

 

[JohnK]

In the last few months I have had charges in SGD dollar and Thai baht on my Amex gold card. I stand to be corrected but I have calculated their current exchange rate margin at ~1.70%.

The good thing is that Amex does not charge a transaction fee.

 

[Sheriff]

Even if the transaction is via US$, you still only get charged the exchange fee once. I have not found this practice to be unfare or more expensive since it was introduced by some card processors last year. As with any excahange rate, some days you win, some days you lose.

Banks convert foreign currency credit card transactions at exchange rates set by credit card companies. The rates set have margins applied. So foreign currency transactions made in currencies other than USD are subjected to two conversion rates to convert to Australian dollars, therefore, these transactions will definitely be more expensive than USD transactions. When credit card companies set exchange rates, as is the case, you always lose!

 

[NM]

Here is what Amex currently charge for foreign currency transactions for the Rewards Maximiser Credit Card:

All foreign currency Charges have been converted into Australian Dollars on the date we processed the Charge. Non-U.S. Dollar Charges have been converted through U.S. Dollars, by converting the Charge amount into U.S. Dollars and then by converting that U.S. Dollar amount into Australian Dollars. U.S. Dollar Charges have been converted directly into Australian Dollars.

As agreed, unless a specific rate was required by law, the American Express treasury system has used conversion rates based on interbank rates (selected from customary industry sources) from the business day prior to the processing date, increased by a single conversion commission of 2%. Any Charges converted by third parties prior to being submitted to us have been at rates selected by them.

Now, looking at a transaction I had for US$29.99 on 6th January, I find Amex charged me A$41.01. The US$ exchange rate published by finance.news.com.au for 5th January 2006 was 0.7459. This exchange rate does not include any commissions for anyone and I would consider it fair to use for the pre-commission transaction.

So adding the 2% that Amex claim to add to the transaction, I make the exchange rate they should be using to be around 0.73098, which would make my US$29.99 purchase to equate to A$41.03. My statement shows they charged me $41.01. So I am comfortable that the exchange rate used by Amex for this transaction was fare and accurate and did not include any hidden commissions, just the published 2% I have agree to pay them under the terms and conditions of use of the credit card.

Banks convert foreign currency credit card transactions at exchange rates set by credit card companies. The rates set have margins applied. So foreign currency transactions made in currencies other than USD are subjected to two conversion rates to convert to Australian dollars, therefore, these transactions will definitely be more expensive than USD transactions. When credit card companies set exchange rates, as is the case, you always lose!

In my experience with checking my Amex foreign currency transactions (and I check them all), I am comfortable that their base rates used do not have margins applied and that the only margin they apply is the 2% commission they have stated they will charge.

 

[Sheriff]

Now, looking at a transaction I had for US$29.99 on 6th January, I find Amex charged me A$41.01. The US$ exchange rate published by finance.news.com.au for 5th January 2006 was 0.7459. This exchange rate does not include any commissions for anyone and I would consider it fair to use for the pre-commission transaction.

Naturally, I can't confirm what NM is saying because it relates to a credit card transaction he claims to have made.

However what I can reconfirm is that credit card companies set their own exchange rates based on interbank rates and not based on exchange rates published by finance.news.com.au.

 

[NM]

Naturally, I can't confirm what NM is saying because it relates to a credit card transaction he claims to have made.

However what I can reconfirm is that credit card companies set their own exchange rates based on interbank rates and not based on exchange rates published by finance.news.com.au.

And each time I check my foreign currency transactions on my Amex statement, the exchange rate used by Amex (pre their published 2% commission rate) has been almost exactly the same as the rate published by finance.com.au for the day previous to the statement transaction fate. So I am comfortable that I am not being ripped off by Amex screwing around with the rates. So it doesn't matter to me who is setting the rate that Amex use. What matters to me is that the rate the use seems to be fare and accurate and not skewed in their favour.

Check your own transactions and see if your bank/CC provider is playing above board. Its very easy to do. I check the finance.com.au site each day and note the rate in a spreadsheet as I use it to track some US$-linked share option values, so its easy to go back and see what the rate was on the day prior to my CC transactions. My spreadsheet goes back to 12th December 2002 when the rate was 0.5607.

 

[JohnK]

...I check the finance.com.au site each day and note the rate in a spreadsheet as I use it to track some US$-linked share option values, so its easy to go back and see what the rate was on the day prior to my CC transactions. My spreadsheet goes back to 12th December 2002 when the rate was 0.5607.

Quite correct also according to history lookup on x-rates website. Are you using the date 12/12/2002 in Australia because in the US the exchange rate was 0.560702 on the 11/12/2002?

2002-12-09 December 09, Monday 0.563 USD 
2002-12-10 December 10, Tuesday 0.5595 USD 
2002-12-11 December 11, Wednesday 0.560702 USD 
2002-12-12 December 12, Thursday 0.565099 USD 
2002-12-13 December 13, Friday 0.564599 USD

 

[NM]

Quite correct also according to history lookup on x-rates website. Are you using the date 12/12/2002 in Australia because in the US the exchange rate was 0.560702 on the 11/12/2002?

The 12th December 2002 date was a just a reference to the start of my own archive of exchange rate history. The example transaction I noted was dated 6th January 2006.

Since my credit card is with American Express Australia and their information states the rate used is the rate from the business day prior to the processing date, I am assuming this is the rate at the close of business on the previous date in Australia, and this has always been within a whisker of the rate at which my transaction has been processed.

Now I am sure there are credit card providers that charge less than the Amex commission of 2%, but not many that also provide 1.5 points/A$ and that is another story altogether.