Beware Credit Cards Charging Foreign Transaction Fees On Domestic Purchases

Banks are increasingly charging foreign transaction fees on domestic purchases, a dangerous practice that’s likely to expand as banks look for new ways to generate profit. Tripso tells us the story of Sunil, who bought tickets with Qatar airlines, which sounds ever so expensively foreign. Citi charged a 2% foreign transaction fee, even though the tickets were bought in U.S. dollars and processed by the airline’s central reservation system based in Washington D.C.

Expedia’s customer service team researched this case, and found that Expedia submitted the round-trip amount ($1,468.80) to Qatar Airlines as a U.S.-based purchase. Qatar Airlines verified that they processed the charge via their central reservation system based in Washington D.C. The customer’s credit card company, Citibank, then charged a foreign transaction fee in line with its cardholder agreement with the customer.

It is Expedia’s assessment that the customer’s credit card company is charging a fee, likely because Qatar Airlines is not a U.S.-based company, per its cardholder agreement. Because the fee was not charged by Expedia.com or Qatar Airlines, neither Expedia nor Qatar Airlines has the authority to reverse this charge.

By this logic, I could get charged a foreign transaction fee by doing business with any non-US company, even if the charge takes place in the United States. If I buy a Sony camcorder or a set of Henckels knives – ding! – there’s two percent!

Does this seem fair to anyone?

Warning! Foreign transaction fees are popping up everywhere [Tripso]
(Photo: malpo90)