Foreign Transaction Fee For US Dollar Transactions!

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I just received a letter from FIA (who process my Merrill Lynch Card – now Bank of America I guess). I’ll reprint this letter in full here :

CHANGES TO YOUR CREDIT CARD AGREEMENT

Please read this document carefully and keep it with your Credit Card Agreement. Except as amended below, the terms of your Credit Card Agreement remains in effect. If there is a conflict, the terms in this Amendment will prevail.

FOREIGN TRANSACTION FEE

What is happening:
We are expanding the definition of “Foreign Transactions” to include transactions in US dollars if they are made or processed outside of 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% of the US Dollar amount of each foreign transaction. This fee is in addition to any other applicable 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 with the following:

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

    My two cents – Great. While taxpayers subsidize BOA, they continue to reduce credit lines even on customers who pay on time! And now, they will consider a US dollar by a foreign merchant a foreign transaction fee. That means, for example, if your web host is in Canada and you auto bill it to your credit card, you will be hit by a 2% fee!

    Now, my Merrill Lynch card is hardly used at all. So this will not affect me. But it sure is frustrating that credit card issuers who receive TARP money continue to find ways to squeeze the very consumers who are going to foot the TARP bill.

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    3 Responses to “Foreign Transaction Fee For US Dollar Transactions!”

    1. Nick Says:

      You can argue the merits of fees such as this but a bank having received federal bailout funds shouldn’t be a factor. If you do take government subsidies into consideration, you’d have a hard time justifying any fee/interest/money making that a bank charges and these banks would find themselves relying on public funds forever.

    2. judy mcginnis Says:

      is there any credit card that does not charge a foreign tranaction fee when traveling in europe?

    3. Mike @ Stock Picks Says:

      Another ripoff: Merchant fees

      Some merchants are now charging foreign customers in their home currencies. (We’ve had this happen to us.) For example, a hotel in Germany might bill an American customer in U.S. dollars instead of euros and earn a 2% to 5% commission for this unrequested “convenience.” To avoid such fees, insist on being billed in local currency. (The Wall Street Journal reports that Visa requires merchants to let customers opt out of conversion, and American Express waives its conversion fee if the merchant has converted the charge to a foreign currency.) total rip off

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