We have been traveling for a very long time and have always used our credit card for many things. In a week, we are going to Little Cayman for a week of diving. Since we will be using Nitrox, instead of just air, we will acrue a $520 charge for the nitrox. We have always put that on our credit card, but now, if we do, the bank will put 3% on top of that for currency exchange fee. How are other people handling this? Just biting the bullet and paying the 3% or carrying huge amounts of cash. Really don%26#39;t want to use travelers check, since so many places won%26#39;t accept them. Any ideas/solutions? I think the banks are being jerks to do this to us.
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I doubt if anyone on this, the Paris forum, will know the answer. I suggest you post your question on the Cayman Islands forum.
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I am not sure why anyone might doubt our ability to successfully respond to this question.
Visa/Mastercard recently changed their policy with reference to commissions paid to them on foreign transactions. They each charge the consumer a 1% currency conversion fee on all transactions not made in dollars.
Enter Dynamic Currency Conversion which is a system by which foreign vendors actually charge your account in dollars, effectively keeping the currency conversion fees to themselves. Often the conversion rates are not as favorable to you as what you might obtain from Visa/MC. It is for this reason that any DCC option should be declined.
Back to Visa/MC, who disliked losing the 1% fee to those accepting a DCC made on their foreign transactions. The Visa/MC response (which occurred sometime this spring) was to charge 1% on all transactions made outside of the US - regardless of the currency actually used in the transaction.
An additional aspect is that credit card agreements between Visa/MC and their vendors usually stipulate that customers be offered the option of being able to settle their obligations or to pay their bills in the local currency. If you are not given the local currency option by a vendor, simply write %26quot;local currency option not available%26quot; next to where you sign your name and contest the charge when you receive your bill. This should reverse any DCC charges incurred in connection to a foreign transaction paid in dollars.
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Your next question is perhaps %26quot;but the charge incurs a 3% fee, not a 1% fee%26quot;. The difference between the 1% Visa/MC currency conversion fee and whatever you are actually charged on your monthly statement is taken by your credit card issuing bank. 3% is actually on the low end of banks who charge such fees, some card holders are paying 5% on international transactions.
Here is a list of what certain banks charge:
indexcreditcards.com/internationaltransactio…
If you would like specific detail on any individual charge made internationally (including the bank fee):
…visa.com/pd/…consumer_ex_rates.jsp
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Solution: find a different bank because better deals are widely available. Here are a few examples:
Capital One credit cards - absorb all international transaction fees including the currency conversion fee.
http://www.capitalone.com/creditcards/
Schwab One account - absorbs all international transact fees including the currency conversion fee. ATM withdrawals are available without any fees (I am unsure about the Cirrus/Pulse 1% currency conversion fee)
schwab.com/public/…schwab_one_with_ic.html
USAA Federal Savings Bank - Passes along only the currency conversion fee. ATM withdrawals are available without fees, customer pays the Cirrus/Pulse 1% currency conversion fees. USAA banking services are open to all those who apply.
http://www.usaa.com/
Local credit unions may offer banking products similar to those of USAA.
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It took 7 days for my new Capital One card to arrive. You can ask them to rush it, but you probably wont get it in time.
A couple of months ago, Bank of America - the bank we bailed out - decided to further goudge their customers by charging a 3% fee for any charges billed in US DOLLARS overseas! I signed up for the Capitol One and cut up my Bank of America card as soon as the Capitol One one arrived.
I still think they could be passing along a less favorable rate to compesate for lack of fees but try not to think about it too much!
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