BoingBoing recently had a post that we’re sure many Shanghaiist readers can relate to. It’s entitled “Ripoff: Visa/Mastercard’s ‘Foreign transaction fee’“:
I just got off the phone with Citibank after noticing a bunch of “Foreign Transaction Fees” on my bank statement — turns out that when you use your credit or debit card outside of the US, Visa and Mastercard charge three percent in transaction fees on the spend. It doesn’t matter if you use an ATM, buy over the Internet/phone, or walk into a store — the credit-card companies always dip their beaks. When you pay your hotel bill, when you buy a plane ticket, every time you use Amazon.uk to order a British release (Citibank told me that they even charge the fee when I withdraw from my Citibank US account while at a Citibank UK ATM, using Citibank’s own network!).
What makes this such a rip-off is that the credit-card companies already charge a fee — up to five percent! — to the merchants for processing the transaction. So Mastercard and Visa are getting a slice from the store, and a slice from the customer. In a global marketplace, Mastercard and Visa are acting like letting you spend your own money is a special service deserving its own fee.
The Citibank rep I spoke to told me that the fee used to be one percent, and that it was hidden on the credit-card bills, but that in 2006, the fees tripled and Citi started to break them out on the bill so you could see how badly you’re getting hosed.
The comments, one of which comes from the “frugal traveler” himself, are worth reading, as well. Hopefully these international fees don’t come as a surprise to you, but if you are in doubt about your bank’s policy, read the fine print on your bank statements — some charge ridiculous fees, including as much as $5 per ATM withdrawal — and know that you have options. The American credit union we belong to doesn’t have international transaction fees. In fact they deposit money into our account each month just to cover ATM fees banks might charge us. And, as one BoingBoing commenter pointed out, this doesn’t appear to be a Visa/Mastercard issue per se, as the fees vary greatly from bank to bank.