Another NYT article the same day shown light on another source of income—foreign transaction fees of up to 3 percent when a merchant processes your card overseas. NYT coverage.
Another NYT article the same day shown light on another source of income—foreign transaction fees. Most banks charge up to 3 percent when a merchant processes your card overseas. (Read my other post on rewards fees)
The author tries to detail possible additional costs incurred to give the banks some credit (pun intended) but he concludes they clearly don’t add up to the amount they earn. He cites a lawsuit Schwartz vs. Visa, that noted “from Feb. 1, 1996, through Dec. 31, 2000, Visa had $6.9 million in multicurrency conversion costs for American cardholders and $630.1 million in currency conversion and related revenue.” Now that’s a profit margin.
There’s one notable exception to this rule: Capital One. I have to give credit where credit is due (pun intended again): My husband did the research back in 2005 when we were moving to England for a year, and he switched us to Capital One for that reason alone. Now back in the US permanently, we use another credit card but keep that Capital One in the back of our wallets for travelling.
The article does say that your local community bank or credit union may not charge foreign transaction fees. In defense of our big bank-card using ways, we kept most of our savings in our credit union account in the States—just withdrawing pounds from the local ATM and paying the normal foreign ATM usage fee. Our credit union didn’t charge foreign exchange fees.