WARNING: AMEX Exch Rate Errors

[markis10]

This has been an issue for a long time, the key points:

1. Applicable T&C's, this is on my old statements so it may not be current as I got rid of Amex "If you incur a Charge in foreign currency, it will be converted into US dollars on the date it is processed by us or our agents. Unless a particular rate is required by applicable law, we will choose a conversion rate that is acceptable to us on that date. Currently, the conversion rate we use for a Charge in foreign currency is no greater than (a) the highest official conversion rate published by a government agency, or (b) the highest interbank conversion rate identified by us from customary banking sources, on the conversion date or the prior business day, in each instance is increased by 2% "

2. AMEX do NOT base their exchange rate on the rate they actually paid for the currency in question. Instead they search for the highest rate that another source paid for a currency, then add an additional 2%, with daily variations of 5% quite common at present then you could be paying 7% or more compares to the reference rate at close of trade on the day of the charge or settlement.

Got rid of it a while a go for this very reason!

 

[moa999]

I also note that xe.net provides mid-market rates... the rate to a buy/sell spread will generally be out of favour.

As a comparison on my recent Asia/ Euro trip predominately using a Wiz Mastercard for cash and cc transaction general variance to xe.net was 1-2% worse than xe.net quoted - with some more negative and some more positive (note this was mid-Oct when there where some wild swings)

(specified amex and st.george charges excluded in the analysis below)

[FONT=Arial][SIZE=2][COLOR=#000000]Date Varience to xe.net Card[/COLOR][/SIZE][/FONT]
 
[FONT=Arial][SIZE=2][COLOR=#000000]AUD RUB[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]22 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.1%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]22 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.1%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]23 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](8.1%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]24 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.0%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]24 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]6.4% [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
 
[FONT=Arial][SIZE=2][COLOR=#000000]AUD EUR[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]17-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.2%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]17-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.3%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]18 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.0%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]19 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.2%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]20-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.0%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]20-Oct-3008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.3%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
 
[FONT=Arial][SIZE=2][COLOR=#000000]AUD SIN[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]10-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](0.9%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]11 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.1%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]11 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](0.9%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]11 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.1%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
 
[FONT=Arial][SIZE=2][COLOR=#000000]AUD GBP[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]13-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]1.7% [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]13-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]0.1% [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]14-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.4%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]14-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.4%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]16 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.0%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]16 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.0%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]16 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.0%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Wiz Mcard[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]16 Oct 2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](1.3%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]Amex[/COLOR][/SIZE][/FONT]
 
[FONT=Arial][SIZE=2][COLOR=#000000]AUD HKD[/COLOR][/SIZE][/FONT]
[FONT=Arial][SIZE=2][COLOR=#000000]12-Oct-2008 [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000](2.5%) [/COLOR][/SIZE][/FONT][FONT=Arial][SIZE=2][COLOR=#000000]St.George Visa[/COLOR][/SIZE][/FONT]

 

[RB]

What are the chances of an Amex exec coming on the forum with an explanation?

 

[NM]

What are the chances of an Amex exec coming on the forum with an explanation?

About the same as Amex using an exchange rate that is the customer's favour.

 

[medhead]

"If you incur a Charge in foreign currency, it will be converted into US dollars on the date it is processed by us or our agents. Unless a particular rate is required by applicable law, we will choose a conversion rate that is acceptable to us on that date. Currently, the conversion rate we use for a Charge in foreign currency is no greater than (a) the highest official conversion rate published by a government agency, or (b) the highest interbank conversion rate identified by us from customary banking sources, on the conversion date or the prior business day, in each instance is increased by 2% "

2. AMEX do NOT base their exchange rate on the rate they actually paid for the currency in question. Instead they search for the highest rate that another source paid for a currency, then add an additional 2%, with daily variations of 5% quite common at present then you could be paying 7% or more compares to the reference rate at close of trade on the day of the charge or settlement.

Well this explains the variation is exchange rate sources quoted by AMEX.

It could very well explain the variations seen for days with a big range in currency trades. They just pick the highest from any government agency, or main financial institution from around the world. The average just isn't going to help.

But I'm not sure how to interpret the highest exchange rate. Is it highest in relation to the first or second currency in any given conversion? Maybe it's highest in relation to the USD which would be lowest for other currencies.

 

[paul4471]

"The AMEX of Evil" comes to mind.

Well I for one represent about a $150k spend per year through Amex. I'm sure I'm not the biggest spender by any stretch on this forum.

What if we drafted a group letter to Amex demanding an answer to how these rates are being calculated, threatening a complaint to the relevant ombudsman and more importantly threatening withdrawal of our business. Interestingly, this is probably the sort of story that one of the travel magazines or the travel section of a newspaper would pick up and the negative press for Amex would not be good.

I'm doing more and more overseas work and I need a card I can rely on, not one that can charge me as much 9% extra for the transaction with absolutely no way of working out how the rate is calculated - that is bloody ridiculous!!

I so wish there was an easy way for an Aussie to open a US based credit card with AAdvantage points earning capacity. At least that would sort the $US based transactions and I could pay it woth Ozforex knowing exactly what it was "costing me" on any given day.

Off topic - I notice that the Amex website has an option for people moving overseas to transfer their card to the new country with them. Has anyone done this with the US before?

pm me if interested in a group letter of complaint.

paul4471

 

[NM]

But I'm not sure how to interpret the highest exchange rate. Is it highest in relation to the first or second currency in any given conversion? Maybe it's highest in relation to the USD which would be lowest for other currencies.

I think we can interpret "highest" to mean "most favourable to Amex".

 

[alemdohorizonte]

"The AMEX of Evil" comes to mind.

Well I for one represent about a $150k spend per year through Amex. I'm sure I'm not the biggest spender by any stretch on this forum.

What if we drafted a group letter to Amex demanding an answer to how these rates are being calculated, threatening a complaint to the relevant ombudsman and more importantly threatening withdrawal of our business. Interestingly, this is probably the sort of story that one of the travel magazines or the travel section of a newspaper would pick up and the negative press for Amex would not be good.

paul4471

i am onboard with this. last year i put approx 300k through my amex, over half being international transactions. the years before that about 200k each year, same overseas spend ratio. i never checked to see if amex was cheating me. i just trusted that amex would be honest with me. boy what a fool i was.

i agree that this would be an interesting travel story--especially if we approach the writer as a group could show him/her how much travel we do and how much using amex when traveling has cost us. it's a cruel irony that amex' best customers are the one that are hurt the most by their egregious behaviour.

 

[porkchop]

Do these calculations here account for the AMEX process of converting to USD first and then to AUD? I'm not sure the transaction date really means anything concrete. Based on my visa card experience the transaction day is when you made the purcahse with a merchant. It can take a number of days for the transaction to be processed by the merchant. AMEX use the exchange rate on the billing day not the day that one makes a purchase. So the date on the statement may not be the day the currency was converted.

Given the wild currency swings recently, processing via USD and that IMO the transaction most likely billed on a different day. I'm not surprised by the differences quoted in relation to a single date exchange rate.


Pedantic note warning: is now redundant

Checking Amex statement at the back (2nd page). All non-USD transaction is converted to USD first + 2.5% .....

 

[Danger]

pm me if interested in a group letter of complaint.

paul4471, I'm all for action. First, though, I want to see the response I get from AMEX. My thinking is they will come back with an excuse and not adjust my account. However, if they come back saying 'yes, we made a mistake, here's the correction' then I want to go them. That to me would suggest they do it all the time and just hope the consumer doesn't notice. Hopefully I'll have a response from them by Tuesday of next week.

 

[medhead]

I think we can interpret "highest" to mean "most favourable to Amex".

The most AMEX favourable would be to use the highest related to the USD. But this would produce an inconsistency in the overall transaction by favouring the currency being convert to on the first transaction and then favouring the currency being converted from in the second leg. Seems to me it would tend to create confusion and impair the customer from understanding what they signed up for. :?:

If they do this it could be a point to raise in any further dealings about this issue.

 

[NM]

The most AMEX favourable would be to use the highest related to the USD. But this would produce an inconsistency in the overall transaction by favouring the currency being convert to on the first transaction and then favouring the currency being converted from in the second leg.

That seems to be assuming the same source is used for both conversions. that does not need to be the case to meet the Amex definition.

 

[medhead]

That seems to be assuming the same source is used for both conversions.

Not necessarily.
But I was confusing myself on the highest thing. If I sounded confused that because I was. I think I have it now thanks for "talking" in through, it really helped collect my thoughts.

 

[NM]

Not necessarily.
But I was confusing myself on the highest thing. If I sounded confused that because I was. I think I have it now thanks for "talking" in through, it really helped collect my thoughts.

Now its all as clear as a squid-infested goldfish bowl

 

[Therma]

It is funny that this thread would come up today as I spent half a day ripping out my hair and cursing (under breath) the telephone operators in various places.

Exhibit 1XE.com)
Date on transaction receipt:October 19, 2008Amount on transaction receipt:40,425.00 JPYMid-market rate for JPY to SGD on 2008.10.17:
(Excluding bank charges)0.0145296Value of transaction in your currency:
(Excluding bank charges)587.36 SGDAmount shown on credit card statement:607.57 SGDYour "hidden" fee estimate:0.00 SGD ( 0.000% )ACTUAL BANK FEES for this purchase:20.21 SGD ( 3.441% )


Fair enough, even though there is no bank involver. It is a co-brand Krisflyer Gold Amex issued by Amex directly. I always do interbank +/- 3% from Oanda as per company policy.


Exhibit 2:
Date on transaction receipt:October 21, 2008Amount on transaction receipt:58,400.00 JPYMid-market rate for JPY to SGD on 2008.10.21:
(Excluding bank charges)0.0147831Value of transaction in your currency:
(Excluding bank charges)863.33 SGDAmount shown on credit card statement:994.10 SGDYour "hidden" fee estimate:0.00 SGD ( 0.000% )ACTUAL BANK FEES for this purchase:130.77 SGD ( 15.147% )


Call to Amex Singapore resulted in a lecture by a trained monkey about currency market fluctuations and volatility and an offer to send some information on how the fees are calculated. My wife is a former Forex exec so I politely declined the info and demanded the manager. Promised to investigate. Expecting response by Friday. Seriously ticked off about being ripped off by 12%.

Exhibit 3:

Date on transaction receipt:October 17, 2008Amount on transaction receipt:804.23 USDMid-market rate for USD to SGD on 2008.10.17:
(Excluding bank charges)1.47946Value of transaction in your currency:
(Excluding bank charges)1,189.83 SGDAmount shown on credit card statement:1,214.39 SGDYour "hidden" fee estimate:0.00 SGD ( 0.000% )ACTUAL BANK FEES for this purchase:24.56 SGD ( 2.064% )

Why should I be upset about being charged only 2%? (Despite inconsistency in fees? Well :

Please check Exhibit 3a:
Date on transaction receipt:October 17, 2008Amount on transaction receipt:1,006,104.00 KRWMid-market rate for KRW to USD on 2008.10.17:
(Excluding bank charges)0.000829872Value of transaction in your currency:
(Excluding bank charges)834.94 USDAmount shown on credit card statement:804.23 USDYour "hidden" fee estimate:0.00 USD ( 0.000% )ACTUAL BANK FEES for this purchase:-30.71 USD ( -3.678% )

This is the amount charged by Intercon Coex in Seoul on a slip marked "Amex Overseas".

Now exhibit 3b courtesy of Oanda: (interbank +/-3%)
Friday, October 17, 2008
1,006,104 South-Korean Won = 763.122 US Dollar
1,006,104 US Dollar (USD) = 1,407,233,970.386 South-Korean Won (KRW)
Interbank rate +/- 3%
This means:
You buy 1,006,104 South-Korean Won : 763.122 US Dollar
You sell 1,006,104 South-Korean Won : 716.521 US Dollar


Now remember I was charged 804.23, not 716.521. So who do I believe?

So as a result: (Oanda)

Friday, October 17, 2008
1,006,104 South-Korean Won = 1,131.137 Singapore Dollar
1,006,104 Singapore Dollar (SGD) = 949,390,433.723 South-Korean Won (KRW)
Interbank rate +/- 3%
This means:
You sell 1,006,104 South-Korean Won : 1,060.716 Singapore Dollar

Now 1,060 SGD hardly equals 1,214 SGD

Intercon blames Amex, but concedes they set their own rate KRW to US even though the slip looks like regular Amex slip ( I mean how often do you check local currency to USD? In all my other transactions it has been spot on)



So who is at fault with this particular transaction? Intercon for using a pathetic rate and not making it transparent? Or Amex for letting them get away with it: after all it is an Amex Slip that I signed, hotel bill was in KRW and I assumed USD under the KRW was either an indicator (and billing would be in KRW still) or honest USD conversion.

Again both Intercon and Amex are investigating.

What is my recourse in these 2 discrepancies? Obviously I will now check every USD hotel bill to avoid the IC irregularity but as for AMEX being all over the place ... There does not even seem to be a method to their madness. Do I need to check every forex transaction from now on? Probably not since I would pick them up when comparing my converted expenses to the statement.:evil:

 

[Evan]

I always try to only get charged in the local currency but in Korea sometimes and especially countries like Vietnam you get VND converted to USD, and i look at the conversion think, wow thats bad but its company expense so dont loose too much sleep, in the end it converts back to a good AUD or SGD value depending on what card so i am none the wiser.

I only just rememered my VND transactions in Sept so i will pull them out tomorrow and check them but i do remember the rates were much better than i expected. Not to say it was not 5% just better than i expected and better than the USD amount indicated at the time.

E

 

[Therma]

I always try to only get charged in the local currency but in Korea sometimes and especially countries like Vietnam you get VND converted to USD, and i look at the conversion think, wow thats bad but its company expense so dont loose too much sleep, in the end it converts back to a good AUD or SGD value depending on what card so i am none the wiser.

I only just rememered my VND transactions in Sept so i will pull them out tomorrow and check them but i do remember the rates were much better than i expected. Not to say it was not 5% just better than i expected and better than the USD amount indicated at the time.

E

It is a pain though having to explain to my boss why I am spending almost 500SGD a night for hotel and also to photocopy the AMEX bill, etc etc. The reason I paid attention to it is because yesterday was the first time (or I hope that it was the first time since I usually spend 6-9K a month on my AMEX overseas) the bills were so far out. If I didn't crosscheck them against my AMEX bill and just OANDAd them as usual I would be out of the pocket by 350SGD.

Vietnam, India, Indonesia and Phils have not been a problem with their USD conversions, the total bill even when converted to SGD is usually very close, <5SGD diff even on amounts exceeding 1K. Funny thing is that when I contacted Intercon in Seoul they themselves did not know where they came up with the amount, they said it should have been 792 not 804 but "presumed" this is the rate given to them by AMEX.

 

[oz_mark]

I did a check of some foreign exchange stuff on my Amex back in August and September. Aside from one MYR transaction that worked out to 4% to Amex, the rest are pretty close to 2.5%.

 

[Danger]

I did a check of some foreign exchange stuff on my Amex back in August and September. Aside from one MYR transaction that worked out to 4% to Amex, the rest are pretty close to 2.5%.

oz_mark, you may need to go one step further back. The problems we've been experiencing have to do with the exchange rate used, which is relevant before the 2.5% is added.

 

[oz_mark]

oz_mark, you may need to go one step further back. The problems we've been experiencing have to do with the exchange rate used, which is relevant before the 2.5% is added.

I used the xe.com to work out the charges, based on inputting the foreign amount, the australian amount and the date of transaction (or at least the day before the transaction), and the xe.com calculator worked it out.

So in my case, the exchange rates used + 2.5% give an answer close to what I actually was charged.