Banks Charging For Overseas Credit Card Purchases

Be careful how you use your credit card when you travel abroad. Many banks are now charging customers a fee when they use their credit card for overseas purchases (which includes online transactions with non-U.S. merchants who don’t use a U.S. credit card processor).

Starting this month, Discover Financial Services began charging a new 2% fee for foreign transactions, while more credit-card customers at Bank of America will get hit with foreign-transaction fees next month (June 2009). Late last year, American Express raised its transaction fees to 2.7% from 2%.

For many years, banks have charged customers a fee for using their cards overseas IF the purchases were made in a foreign currency. Visa Inc. and MasterCard Inc. charge a 1% fee for converting foreign currencies into U.S. dollars – a fee that most banks pass along, along with their own markups which typically range from 1% to 2%.

What banks do not currently (as of May 12, 2009) charge foreign transaction fees? Call your own bank / credit card company and ask customer service directly, but two large banks that don’t currently charge this fee are Capital One and Charles Schwab. But for how long though? Keep a close eye on your credit card statements and communications.