Fee Alert: Watch Out for the New Foreign Transaction Fees

I first heard rumblings about changes to foreign transaction fees last week. A reader wrote in a complaint about her credit card charging a 3 percent foreign conversion fee on an international airline ticket purchase made online in U.S. dollars. Here's an excerpt from her email:

I have a problem with Citibank MasterCard which imposed a 3% foreign transaction fee (~$150) on my online purchase of tickets with Malaysia Airlines recently. The online purchase took place in New York at work. I had no idea of this new rule until I read the credit card statement. I called Citibank customer service, they'll not waive the fee because Malaysia Airlines is a foreign-based company. I kept telling them I did the online internet purchase in NYC not outside U.S., and I should not be charged for the extra fee.

It seems like a fluke – but these days, don't put anything past the credit card companies. Then I got a letter from Bank of America confirming my suspicions. You can click on the image to read the scanned version. Here's the text of the notification:

We are expanding the definition of "Foreign Transactions" to include transactions in U.S. dollars if they are made or processed outside the United States. As a result, these transactions (posting on or after June 1, 2009) will be subject to the Foreign Transaction Fee, currently 2 percent of the U.S. dollar amount of each such Foreign Transaction. This fee is in addition to any other applicable transaction fee.

Amendment to Your Credit Card Agreement:
Effective on June 1, 2009, we are replacing the definition of "Foreign Transactions" in the section of your agreement titled Words Used Often in this Agreement with the following:

"Foreign Transaction" means any transaction made in a foreign currency, and any transaction made in U.S. dollars if the transaction is made or processed outside of the United States. Foreign transactions include, for example, online purchases from foreign merchants.

Blerg. Foreign transaction fees were already one of the more heinous credit card charges – the fee amount is usually buried in with the converted currency amount and is very difficult for a traveling cardholder to identify.

Now it sounds like you'll have to worry about picking out these fees from purchases made within the United States too. In particular, watch out for booking flights or hotels with international companies or shopping online with merchants that aren't based in the U.S. 

It's difficult to tell from this disclosure exactly what will count as a foreign transaction. If you spot a foreign transaction fee on your credit card statement for a purchase made from within the U.S., please share your report with us by email or in the comments section below. We'd love to compile a list of retailers and companies that are adopting this new definition as they conduct their business.

Emily Peters – Credit.com's personal finance expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

Comments

[GGBG]

So if you buy a pound of tomatoes grown in Mexico but sold through your local grocery store, the leeches from Citi & BoA will charge you 3% foreign transaction fee. WTF? Where & how is this going to end?

[SKG]

Got dinged with a 3% charge with a Citi card for a international flight ticket purchase at Expedia.com. The charge was in USDs and the final amount paid online was in USDs. This is ridiculous, if a buy a Chinese made product in Walmart will they charge me with a fee ?? I should have used AMEX, now I have to pay cancellation fees if I have to charge another card.

[Eugene]

Bought from DealExtreme (HK) recently using PayPal funded with Citi MC. Got dinged with 3%. Called and after 2 CS got the charges removed. If you don't ask, you don't get. Just be polite :)

Just sent an email to Discover to inquire about their Foreign Fees, here is their reply:

"Thank you for your message. If the merchant uses a third party biller, like Paypal, that is based in the USA, you will not be charged the foreign transaction fee. I hope this information is helpful."

So, fund PayPal with Discover.

[Joseph Joyce]

My doctor in USA is of Indian origin. If I pay him using my Citi card, will I get slapped the 3% foreign transaction fee?

[tim wuu]

i bought eva airline ticket from SFO to TPE online, paid in USD, but 3% foreign transaction fee charge on FIA card. I called FIA and EVA, no one can resolve this issue. FIA told me that EVA charged my card from Taiwan, I then called EVA, they told me it's FIA who made the decision. It looks they need me to file some paperworks to get this thing moving...