I received a letter from Citibank a couple of weeks ago stating that they are changing their policy on foreign transaction. Now even a US$ transaction will be charged a 3% fee if it is charged by a foreign entity. Prior to this change, only non-US$ transactions were considered "foreign".

I guess just another way for banks to make money.

In this case, Citibank got a foreign charge bfrom Aer lingus in Ireland.

There are a lot of things to complain about with Citibank, but in this case, I think the poster has a beef with Aer Lingus, not the bank.

I just got one of those "annual terms update packets" for by Bank of America CC, and they mentioned that they are going to start doing this now too. Something like, "any transaction processed by a foreign company, in US dollars will now be subject to the foreign tranasaction fee"

Why would it be a foreign company's responsibility to inform you of a charge your domestic bank is going to charge? How would they even know? Why would you expect a foreign company to be able to conduct their business whereever a person who accesses their site is from, rather than where they actually are?

"Citibank slapped a 3% fee on the $2,600 purchase, something Cliff feels the airline should have warned him about."

Why would the OP feel that the airline should tell him about a credit card fee?

Foreign transaction fees are BS. It's not like there was a currency conversion. Citibank shouldn't be charging this nonsense. Didn't the CC companies stop doing this for a while?

[ccfsettlement.com]

I have a Citibank Business Visa and when I travel my company insists everything possible is put on it. They, too, charge the 3%. Sometimes hotels and other merchants can bill you in USD, and you still will get the foreign transaction fee.

It makes expense reporting a bitch.

Change banks or cards if you don't like their terms.

@lotussix: Apparently because where the airline does the processing determines whether the OP gets the fee. If they're doing the transaction in dollars on a US IP, the OP is right to assume it's a domestic transaction unless informed otherwise.

@ShyamasriPera2: The settlement was because the CC companies were rolling the fee in with the purchase and not breaking it out separately, which was deceptive.

Now they usually show it as a separate line item (FOREIGN TRANSACTION FEE), which is ostensibly less deceptive but just as annoying.

When I saw the notice from BoA last week, I thought that they had reached a new low: they decide that they can charge you a foreign transaction fee (and a hefty one at that) for something that isn't a foreign transaction. I guess instead of a new low, it's the new standard.

It's bad enough paying the transaction fees on actual other-currency purchases. I sure as heck won't be paying a CC issuer a 3% surcharge on something that I buy from Lufthansa or BA in US$. (After the disaster that was booking through an online travel service, I always book directly with the airline.) I wonder if letters to the airlines would have any effect.

I swear, as soon as I finish buying a house, I'm going to shop around on credit cards, FICO be damned.

Wow, thanks for posting this guys! I would have been royally screwed next month. Officially BoA's card doesn't begin charging the fee until June 1. I guess I have until then to find a new card.

Everyone should have a Capital One credit card, especially for this. No foreign fees at all. And 1% back, to boot.

At the beginning of this year I renewed my subscription to an academic journal using my Citibank card. The journal is published in and mailed from the US. The renewal notice was sent from an American address. I sent it back to that American address (using only a 42 cent stamp!) authorizing the company to bill me in US dollars for my renewal. When I got my bill from Citibank several weeks later, I saw that they had charged the three per cent foreign transaction fee because the parent company in the UK is the company that processes all of the billing. I actually had to escalate to a supervisor to get the three per cent waved (it was less than 2 dollars), and the supervisor told me that she was doing this once as a courtesy and wouldn't be doing it again in the future.

Next year, I"m sending the publisher a check instead.

Discover doesn't charge a foreign transaction fee, even when dealing with foreign currency. The price I see is the price I pay. Of course, this limits your usage patterns a little, but if your travel is mostly to China Discover is a boon (it's treated as a domestic bank card would so the only places that don't take Discover don't take any other cards either).

@ Eyebrows McGee (on Twitter: LPetelle:

reply isn't working.

what if your credit card does not charge this fee? i guess i am at a loss to why the merchant should advise customers to a fee that may or may not be assessed.

i think that the op should know the terms of his credit card.

If anyone wants a credit card that doesn't charge foreign transaction fees, I've found that the Schwab Bank Invest First Visa is pretty decent. I just used it in Rome and London with no problems at all.

Capital One doesn't charge foreign transaction fees either but they don't seem to have the best customer service.
[www.flyerguide.com]

Be careful with BoA. They tried charging us the foreign transaction fee for a flight we took in April (purchased in feb)on Aer Lingus. Even though they are saying starting in June, they are trying to get away with in now.

This is why I have a credit card I use exclusivly for anything international. The Capital One No Hassel card charges no international transaction fees where all my other cards do. I also make sure to call them before making a big trip to verify nothing has changed.

@Eyebrows McGee (on Twitter: LPetelle): The fee is up to the individual credit card issuer. Most cards have a 3% fee, some do not though. Aer Lingus's website doesn't have a US-based IP address; the purchaser did.

Airline? How can the airline possibly know what fees your credit card will charge?

The airline is in Ireland where else would they charge the ticket. To avoid the fee use a travel agent in the US, or choose a card that does not charge three percent for non US charges. That is an absurd charge. One percent is even a bit much if you ask me.

I've hard it charged on a $14.95/month subscription fee to EVE Online, the developer of which (CCP) is based in Iceland - even though the payment is in dollars. It only came out to a buck or two but it was still pretty annoying. Only reason why I'm on this card right now is because I'm a college student and I need to build my credit score first - once I can get a decent card with a decent limit elsewhere that's what I'm doing.

@s25843: I got that too. The Mastercard added the Foreign Transaction fee, but the BofA Amex didn't.

The banks basically redefines "foreign transaction fees" as either a charge that they have to convert from foreign currency or a charge posted by a non-US based processor regardless of the currency. Therefore, if you purchase something from a Texas company that charges you in Rupe, you will also get a foreign transaction fee.

Changing bank may not be a solution as they are such a cartel that when one start doing it, everyone will follow some day. It is called modelling. You would think that this should be regulated but no, because we are a free country. Unless you can somehow convince our government that this is robbery.

Damn I see the reply button is broke again.

I got hit with one of these fees when I bought ReadIris. I called my bank to complain and they told me that Visa was the source of the fee.
I still call rubbish.

@lotussix: It's a pretty relevant piece of information! A note saying that you *may* incur a foreign transaction fee is all they'd have to state.

The website is located in Dublin, Ireland.

[geotool.servehttp.com]

@haoshufu: Well the free enterprise system hasn't failed us yet. There are at least two credit card companies that don't charge any foreign transaction fees. Schwab Bank and Capital One. There are also debit cards that don't charge any fees.

When I travel abroad, I put away my AMEX and Citi cards and only use my Schwab card. I actually save money because they also give me 2% cash back. Pretty happy with it.

Is he absolutely certain he paid in USD and not just the equivalent? Also, the charge has nothing to do with ordering from a US IP address. If he didn't pay in USD throughout the entire transaction, he's going to incur the 3% charge and it's on him to know that there's a fee.

@lotussix: Yes it is... :)

I'm using Firefox 3.1...

If you conduct alot of business with one country, or a region, just apply for a card thats predominant there. When I got the BofA term changes, I decided to finally take the plunge and get a JCB card so I don't get charged enormous fees while abroad.

@JoshRogan: Capital One is a good card to use abroad because they don't charge a fee and eat the 3% Visa fee too.

Visa charges a 3% fee. Most credit card companies charge another fee on top of that.

@jamar0303: Yeah, problem with Discover is it's rarely accepted in Europe. Capital One beats it for that.

@missdona: but the BofA Amex didn't.

There is such a thing? My head assplode!

I just got a letter from B of A (I have a VISA from them) that was very interesting. It said that from now on they'd charge me a 3 or 4 percent foreign transaction fee for every purchase EITHER (A) in a foreign currency or (B) where the purchase takes place outside the US, EVEN IF the purchase was denominated in US Dollars.

Case A is understandable. B is retarded. One more reason to keep that card sock-drawered except an annual pack of gum.

Also, here's a card besides Capital One (whom I got pretty tired of dealing with) that doesn't charge any foreign transaction fees:

[www.schwab.com]

@pallendo: Believe it.

[wwwa.managerewardsonline.bankofamerica.com]

When they couldn't lower my interest rate any lower, they offered me the Amex with the same credit line.

Foreign transaction fees are non-refundable. This was part of a recent change in terms that went out. Even if the transaction is processed in US Dollars, it's still considered a foreign transaction. Sucks, no doubt, but what do you do?

I bought a vacuum from Dyson.com and WAMU/Chase tried to charge me a "foreign transaction fee" because Dyson is based out of England. I told them that dyson.com is based out of Illinois and the entire transaction was in US dollars. After calling WAMU/Chase they finally refunded the fee, but not after a long hassle

I also noticed that my monthly Skype subscription was getting dinged with this fee. I called to complain about this and after a few minutes of me asking how they could justify this, she told me to read the Patriot Act and that there was a lot of red tape involved in transfers to foreign entities. As a small business owner with foreign transactions, I don't believe it.

@Blinky987: I was thinking the exact same thing. When I'm in Europe, the more "in the know" hotels will do the conversion to Can$ and charge that on my Canadian credit card and I'm yet to see any "foreign transaction" service charge. (The hotel doesn't lose anything in the deal so the larger once were happy to do it.)

I'm wondering if the US$ quoted on the Aer Lingus site was really Irish Pounds (Euros?) in the background and translated on-the-fly for the OP's screen. If this is the case, shame on Aer Lingus for not making it clear on the page.

A website ending in '.com' doesn't automatically mean it's an American commerce site. .com was SUPPOSED to refer to that way back when the spec was written up, but it hasn't been like that since before AOL was a new puppy.

I'd say its the OP's fault for not paying attention. He seemed to know Aer Lingus was an international outfit, so should not be surprised at the foreign fee from the CC company.

OP here. Glad to see this post generated so much interest. In response to a few of the comments, though: From all information on the airline's website, the fare was quoted and paid-for in dollars. The address of the website was .com, not .ie. It is perfectly reasonable to expect that an international airline that does a major portion of its business with US residents would use a US-based credit card processor for their transactions. If it is not going to do this, than it is also reasonable for it to realize that this *might* generate unexpected foreign transaction fees, and to disclose the location of the credit processor. It's not a matter of either the airline or the consumer being unaware of the credit card's terms...it's a matter of the airline disclosing information it could reasonably expect to be significant to the consumer.

@nwaasob: Visa is the source of the fee. Your bank just passes that on to you. Capital One and the other cards without the fee just eat the fee and pay it so you don't have to.

I noticed it on my credit card bill last week. I'd made a $10USD purchase on my American bank's Mastercard to a hosting provider in Canada. On the bill was an extra 25 cent "Internation Transaction Fee". There was however no currency exchange done.

I've used my BA card frequently in Canada and Mexico, and while they do tack on a bit of a surcharge, I've never seen it hit 3%, something I guess i'll need to keep an eye on. Usually though I raid a foreign ATM and carry local currency, much cheaper then currency exchange, and if the exchange rate is good, the service fees are more then offset.

http://www.whois.net/whois/aerlingus.com

The website and server for Aer Lingus are clearly based in the UK based on aerlingus.com and the domain registration information linked above. It's important to note that a .COM address only denotes that the website is commercial in nature and has no relation to its country of origin. Aer Lingus has no business processing its credit card transactions in the USA and there's absolutely no reason to expect that foreign companies should begin to do so.

The foreign transaction in US Dollars can burn you even more - the company often gives you a bad exchange rate when they convert to US Dollars and then you get hit with the credit card fee.

I saw warnings about hotels converting to US Dollars "as a convenience" to the guest over ten years ago. Many hotels took a 5 to 10% profit on the exchange. If the guest questioned it, they would point to the sign displaying the hotel's exchange rate.

This happened to my mom. She paid for a cruise through her college alumni association on a credit card. The cost was in dollars and she sent the payment to a US address - but since the cruise company is headquartered outside the US, she got hit with the fee. So lame.