Currency Conversion Fee increase

[futaris]

Notice of change to your American ExpressCard Conditions

Effective 1 July 2009, the Currency Conversion Fee payable when any charge (including Cash Advances) is processed in a currency other than Australian dollars is increasing from 2.5% to 3.0% of the converted amount.

Just noticed this on my latest Amex statement...

 

[JohnK]

Just what we were missing. More fees....

 

[Evan]

just wait till Mastercard and Visa up there conversion fee now as well.

 

[Homer]

just wait till Mastercard and Visa up there conversion fee now as well.

I believe that individual banks set their own Visa and Mastercard currency conversion fees. In my case ANZ already charges me 3% on my Visa for currency conversions which is why I use AMEX wherever possible.

 

[Myrna]

Mastercard already increased the fee to 3% - just saw it in the statement today! Amex is still 2.5% but I guess this will be 3% after 1st July 2009 - like futaris said.

 

[gavin_phillips]

Strictly speaking it's not MasterCard or Visa which add the bulk of the fees any more - it's your issuing bank. MasterCard and Visa impose upon them a c.1% for transactions performed in a *country* which is not the issuer's home country. Your card issuer then decides to whack on an extra 1-2% as it's own profit margin.

Things used to be different - the MasterCard/Visa fees to the issuers were much higher, but at that point the rules were that these were only charged by the schemes to the issuers (and hence onto the customer) when a transaction was performed in a *currency* which was not the issuer's home currency for that BIN. Then DCC came along and the schemes began to see some of that income eroded and kept by the DCC acquirers instead and hence changed the rules so at least they got to keep 1% of it (even if it's a DCC transaction).

Not all issuers charge this though - some just pass on the 1% card scheme fee (at least in the UK, where there's more competetive financial services products around). I *think* NAB may also do this for Gold Account holders when spending on their Visa Debit card - the 2% charge is totally waived.

 

[beardoc]

So is the conversion from GBP to AUD going to be via USD and so it's now 3% GBP-USD then 3% on USD-AUD?

 

[JohnK]

So is the conversion from GBP to AUD going to be via USD and so it's now 3% GBP-USD then 3% on USD-AUD?

Foreign currency transactions in anything other USD were always converted to USD first and then AUD. The 3% commission is charged on the final AUD amount. I cannot imagine that this will change.

 

[NM]

So is the conversion from GBP to AUD going to be via USD and so it's now 3% GBP-USD then 3% on USD-AUD?

It is my understanding (and experience) that even if conversions are done via an intermediate currency, the "commission" or "conversion fee" is only applied once, being the final conversion to home currency.

The conversion via $US is done to keep the number of rates that need to be managed to a manageable number. For example, if there are potentially 100 currencies that could be transacted, then they need a mesh of about 5000 rates. If converting via a single common currency, they only need to manage 99 different rates.

 

[Danger]

There was a post around AFF somewhere in the past that, if I remember correctly, referred to a credit card that had no conversion fee. Does anybody remember it? Was it a Wizard MC?

 

[serfty]

Certainly Wizard has no conversion fee -per se.

 

[ejb]

Certainly Wizard has no conversion fee -per se.

Hi serfty,

Thanks for this info, but do they just hit you with bad conversion rates or is it really cheaper to use.

ejb

 

[serfty]

Hi serfty,

Thanks for this info, but do they just hit you with bad conversion rates or is it really cheaper to use.

ejb

It is really cheaper to use!

On 6th June I had a transaction of USD42.50 at DFW. This was charged at AUD53.12.

Putting this though XE - Credit Card Charges Calculator gives a rate ~½% in my favour:

Date on transaction receipt:                    June 6, 2009
Amount on transaction receipt:                  42.50 USD
Mid-market rate for USD to AUD on 2009.06.06:   1.26070
(Excluding bank charges) 
Value of transaction in your currency:          53.58 AUD
(Excluding bank charges)
Amount shown on credit card statement:          53.12 AUD
Your "hidden" fee estimate:                     0.00 AUD ( 0.000% )
ACTUAL BANK FEES for this purchase:             -0.46 AUD ( -0.858%)

 

[lovetravellingoz]

Certainly Wizard has no conversion fee -per se.

In terms of total fees and charges thi is still the best card around???

The way things are shaping up it is best not to worry about using a points eraning card when overeses. Use cash where you can....and wizard where you cannot.

One rider would be if you want CC Insurance coverage.

 

[odysseus]

It is really cheaper to use!

On 6th June I had a transaction of USD42.50 at DFW. This was charged at AUD53.12.

Putting this though XE - Credit Card Charges Calculator gives a rate ~½% in my favour:

Date on transaction receipt:                    June 6, 2009
Amount on transaction receipt:                  42.50 USD
Mid-market rate for USD to AUD on 2009.06.06:   1.26070
(Excluding bank charges) 
Value of transaction in your currency:          53.58 AUD
(Excluding bank charges)
Amount shown on credit card statement:          53.12 AUD
Your "hidden" fee estimate:                     0.00 AUD ( 0.000% )
ACTUAL BANK FEES for this purchase:             -0.46 AUD ( -0.858%)

xe is based in the US, so the rates it used would likely be for the 5th (on their time) if it was processed through Wizard (AU) on the 6th our time. Checking the conversion then brings up relevant figures of 53.11 AUD and 0.47 AUD.

Realistically though, there's not one exchange rate a day so the transaction processing time was probably in the middle of those, when the USD was going down (again). Gives good credence to it being a 0 fee card - in US currency.

 

[serfty]

xe is based in the US, so the rates it used would likely be for the 5th (on their time) if it was processed through Wizard (AU) on the 6th our time. ...

The transaction was on the 6th - in Texas!

In any case performing it for the 5th returns:

ACTUAL BANK FEES for this purchase:  	0.01 AUD ( 0.025% )

 

[Mal]

Was doing some digging around about this tonight (due to another thread) and found out that Amex increased the fee from 2% to 2.5% on the 1st Feb 2007.

Also, I've noted that the statement says "when any charge" , yet the fee increased to 3% for both charges and credits occurring in foreign amounts.

Is this a breach of their policy to update people upon changes to their T&C's?

 

[LovemyCC]

At this rate, conversion rate fee will be 40% by the end of this century.

 

[straitman]

At this rate, conversion rate fee will be 40% by the end of this century.

I will have handed all my CC's back by then and will no longer have a need to travel :!:

 

[codash1099]

I will have handed all my CC's back by then and will no longer have a need to travel :!:

I'll probably be travelling but only downwards.