An annoying relatively recent wrinkle in traveling aboard is the fee now levied by credit card issuers for purchases in foreign currency — the foreign transaction fee.
While the basic exchange rate is good, issuers are now charging as much as two or three percent, just because they can. Still, it usually beats the costs associated with changing money.
Now some travelers are discovering these fees on their credit cards before they’ve even left the country — when they’re charging in greenbacks.
One company affected has been Regent Seven Seas Cruises. Mark Conroy, the company President, explains to travel agents,
These charges, which we estimate to affect less than one percent of all of our bookings, are levied exclusively by the card holder’s issuing bank and were initially intended to cover the cost of exchanging foreign currency. Over the years, banks have become more aggressive and began charging this fee solely based on the location of the acquiring bank. In our case, the bank that we use to process credit card transactions is Deutsche Bank, one of the world’s largest and most secure global financial institutions who processes all credit card transaction worldwide in Ireland regardless of the currency.
Regent Seven Seas Cruises only charges transactions in U.S. dollars and as such, the card issuing banks do not incur any cost for converting foreign currency, so any foreign transaction fees charged by those banks only accrue to the benefit of the card issuing bank. So if anyone is “ripping off” the guests it is their credit card issuer.
The cruise line goes on to ask passengers to contest the charges, and if they are not reversed, Regent will reimburse them.
The sums of money involved are not huge. One customer reported a $15 charge on a $900 payment. But not only are they annoying, they will probably be increased in future if the costs are not contested to the banks involved.
Even travel agents are falling victim to this surcharge when they renew their official IATA identification cards. Again, the charges are in U.S. dollars, but the bank is in Montreal. The surcharge is minimal — under a dollar — but the nasty precedent is there.
Most Americans have already learned more than they want to know about some of the problems with a global banking system. Let’s hope this credit card surcharge doesn’t become another costly future lesson.
Rarely are these charges openly listed on most personal credit card statements. The Mastercard/Visa one-percent fee is clearly stated, but foreign transactions fees assessed by the issuing banks are normally hidden in the fine print of credit card agreements.
And how about you, Tripso readers? Have you gotten these surcharges on any U.S. dollar travel booking? If there are enough cases we will make them the subject of a future post.
