New foreign transaction fees on Bank of America cards

Tyler, you have it right. I believe more and more banks will start looking for every penny they can get. Afterall, we have to help them make up the losses they incurred by making billions of dollars in bad loans as well as millions of dollars in bonuses paid to executives who helped them lose that money. All the banks paid "retention" bonuses. The more money you lost for the company, the higher your retention bonus.

B of A, especially, needs the money to make up for absorbing the losses when they bought Countrywide and Merrill Lynch.

Sounds like a good time to get a Capital One card. Since I got mine I don't ever use anything else. AMEX used to make a sizeable profit from me, but not anymore.

Thanks for the heads-up on this Tyler. Looks like I leave my B-of-A card at home when I head to Italy and just take my Capitole Uno.

I wonder if it would be better to obtain euros from BOA before departing instead of relying on ATMs (Barclays) with fees. BOA charges $7.50 just for ordering euros (any amount). I have a Capitol One credit card but one needs cash. I haven't done the math. I ordered a small amount of euros last week for a birthday gift --- maybe I should have ordered more plus the exchange rate is getting higher. Any thoughts?

I don't think this is a new thing. The fee hasn't been a "currency conversion" fee for several years - it's now a "foreign transaction fee." It's not limited to B of A.

Of course this is all the more reason not to let your hotel/restaurant/etc. convert the Euros charge into Dollars. You know they'll use a conversion rate that's several percent in their favor, and your bank will still give you a few percent hit on top of that.

@Audrey: In addition to the $7.50 fee, look into the exchange rate that's used. Probably it will be above $1.50 per Euro. The ATM will still be cheaper.

I have tracked the "price" for Euro from Wells Fargo for years and they consistantly charge an average of 5% over the Interbank rate. That is the price that you pay over the counter at a main branch of Wells Fargo. The Interbank rate, also called the pier-to-pier rate, is the international exchange rate you would see posted in the Wall Street Journal. It is the rate at which major banks exchange currency where no one is the seller or the buyer. The interbank rate is the result of currency auctions and varies throughout the day, depending on whether more banks want Euro or Dollars.

Wells Fargo sets their rate in the morning, and it might be more or less than 5% depending on how the currency market fluctuates during the day.

I also tracked BOA, and they seem to be about 5½% over the interbank rate.

I really have no idea by what you mean by the "VISA" rate. Visa, along with MC, Cirrus, Plus, Star, et al, comprise the "network", which pays the merchants and ATM owners in Europe in Euro and bills your bank over here in $. The network charges 1% over the interbank rate (~½% for handling the transaction and ~½% for foreign exchange). Major U.S. Banks, those with foreign exchange operations, pay the network in Euro + ½%, then charge you 3% for the exchange (nice guys).

Audrey, BofA, like other banks, will charge you 4%-5% to buy Euros here in the U.S. ATMs are less expensive.

Thanks Peter & Larry for the ATM advice even if BOA will now chargea fee even at Barclay's. The conversion rates have always been there but there was no ATM fee. Maybe I'll use my Capitol Once card more than I anticipated.

Even if the bank is now going impose a transaction fee of one percent on withdrawals at Deutsche Bank (Germany), BNP/Paribas (France), and Barclay's UK, the favorable exchange rate you will get at these ATMs, combined with the fact that there are no ATM withdrawal fees, still makes it a lot cheaper than buying Euros from Bank of America before your trip.

You can use this VISA website to calculate your approximate exchange rate. This rate applies not only to credit card purchases, but to withdrawals from an ATM.

http://www.corporate.visa.com/pd/consumer_services/consumer_ex_rates.jsp

"Audrey: In addition to the $7.50 fee, look into the exchange rate that's used. Probably it will be above $1.50 per Euro. The ATM will still be cheaper."

Bank of America and Wells Fargo here in San Francisco have foreign exchange departments where you can buy cash Euros. The exchange rate, however, is about six percent over the VISA rate -- not very good. For example, if the rate you get from an ATM withdrawal in Europe (which rates are set by VISA at most banks) is 1.40 per Euro, Bank of America or Wells Fargo will charge you 1.60 per Euro.

Still more outrageous are commercial exchange bureaus, such as Travelex, which will charge ten percent or more over the VISA rate.

"I really have no idea by what you mean by the "VISA" rate."

Look at my previous post, with the link to VISA's web site. That's what I mean by the "VISA rate". It's the rate that VISA says the consumer can expect to pay on credit and debit transactions. It's very close to the interbank rate.

Just great. And there's a limit to how much I can withdraw per day (I think it's still $300) with my BofA check card, so I can look forward to the per-transaction fees and now these percentages as well.

Is the ATM in Europe still the best way to go? Or should I get European money over here before I go over there? I hate to carry so much cash but these fees are getting really aggravating.

Thanks for the warning. A loyal customer for years with no debt with them and this is the thanks I get from them!

Heather writes:

"Just great. And there's a limit to how much I can withdraw per day (I think it's still $300) with my BofA check card, so I can look forward to the per-transaction fees and now these percentages as well."

It's not that bad, Heather. You've read it wrong what I said. The only change from BofA's previous policy is that they may now charge a 1% "foreign transaction fee" when you withdraw Euros in Europe. For example, say the Euro costs 1.40. With the 1% extra, you would pay 1.41. Still a good rate. By contrast, if you were to buy Euros from BofA here, in the U.S., the rate would be about 1.46. Terrible.

There are still no other fees if you use of the banks in the Global ATM Alliance -- Deutsche Bank in Germany, BNP/Paribas in France, and Barclay's in the UK.

Don't withdraw at other banks' ATMs, however. There is a $5.00 charge for that.

Look you are going to have to buy Euros/Pounds anyway while on your trip. So you just have to do it the cheapest way and that is by using a debit card.
The way I look at it is to chalk it up to the cost of my trip...you cannot get around fees in any case!
There is no free ride...well a few... see the following.

Besides a BOA debit card, I also have a Fidelity card
which charges no fees. I have not used it in a cash
machine but did use it for charges....and yup there were no fees!! Now if I had used my BOA debit as a charge card (which I can do), I would have gotten fees tacked on each transaction. If I was traveling in Italy (or other country) where there were no BOA affiliates, I would just stock up on as many Euros as possible in each transaction. Except now that I have my Fidelity card, I don't have to
worry. (and other people have written about Charles Schwab and Capitol One so check those out as well

Purchasing foreign currency in this country is going to cost you a lot more!!! However, if you are leaving
realtively soon (not next year!), you might buy some
here from the banks as the exchange rates have been going up lately. So the
increase in the exchange rate might make up for the fees. But don't count on it!!! Very professional traders play the currency exchange and you can lose a lot.

Today's Euro rates from various providers. They vary a lot!

Bank of America (ATM withdrawal at European partner banks) - 1.41

Xetrade (get Euro bank draft or wire to a bank account in Europe) 1.421

Wells Fargo (buy in USA at bank) - 1.460

Bank of America (buy in USA at bank) - 1.465

Travelex exchange bureau (order online -- plus a shipping charge!) - 1.538

Currency investing is like playing the stock market. You might win, and you might lose, and these days the volatile markets make it increasingly risky, because it’s hard to predict where the Dollar is going to go from one day to the next.

Another problem is that interest rates on all savings have plummeted since the world economic crisis began last year. A couple of years ago, I thought I was going to make some money buying a few Pounds Sterling and putting them in a UK bank account. Citibank in London was paying six percent – better than you could get at any bank here -- and they welcomed US investors. I bought 1,500 Pounds, at the then current rate of 2.00 Dollars per Pound. I figured the rate would stay at least reasonably stable, and even if it dropped a little, the six percent interest would make up for it, and I would end up having a tidy little sum to spend on my next trip to England.

Well, the first year I made about $80 on the deal, but a few months later, the Pound plummeted to an unheard of 1.45. The lowest rate in 20 years. Even the “experts” were stunned. And, because the Bank of England kept lowering interest rates, my account is now pay paying only 1.1 percent.

The only good thing is that I still have my money, and can withdraw and spend it the next time I go to London. Sure, I lost money on the deal – in terms of what the Pounds are now worth converted back to Dollars – but it’s better than the stock market, where, if the stock you buy goes bust, you essentially have nothing to show for it. So, from one perspective, currency investing isn’t quite as risky as stock investing, because at least you can still spend the foreign money you bought. But, it was a huge disappointment nevertheless.

Tyler, you missed a couple:

ATM withdrawal with almost any small bank or credit union in the U.S. that doesn't deal in foreign currency so pays the network the exchange rate plus 1% ($1.3912/€), $1.405/Euro,

ATM withdrawal with ATM card from Wells Fargo with a PMA account, $1.3912/Euro.

Got to "love" BofA. They raised my interest rate because "you never use the card" I am still trying to figure out how that was going to "encourage" me.

So far my USAA has done great!

I have been charged a 3% foreign transaction fee for a airline ticket that I bought here in the USA. I have called the airline, British Airways, who does not understand why this should be a foreign transaction as it was purchased via their US site in USD etc. Bank of America claims that it was processed outside of the USA which British Airway denies. I should also state that I do live in Texas and that this was a US issued card to my home address in Texas.

It seems that this is a consumer trap where you could be using your card domestically only to be charged a 3% foreign transaction charges cause it was processed abroad?? How would a consumer know of such charges prior to making the transaction??

This was a business class ticket to London costing some 8000USD so the 3% charge is 240USD.

Incidentally I used the card for other transactions whilst in London and I am NOT disputing those charges as they are foreign and I was aware of the foreign transaction fees for that kind of card usage.

I should mentioned that I spoke to several Bank of America employees one stating that since I have traveled to London that this was clearly a foreign transaction???! How silly is that?

Bank of America refused to reverse charges and I cancelled my card. I feel very strongly this is an issue that we should deal with as consumers and travelers as it adds a unreasonable fee for domestic transactions. What can we do??

A frustrated traveler and former Bank of America card holder

Yep... BofA are crooks

Stopped banking with them when they raised an interest rate on a credit card to 33% because I had the audacity to pay one day earlier than what their recently changed billing cycle indicated

"Its going to be even more difficult to find a card that doesn't have the foreign transaction charge. Schwab is no longer issuing Invest First Visa cards."

Interesting. I got my card about a year ago. Guess somebody decided it was a money loser. I hope my 2% cash back privilege isn't withdrawn!

What you might not know is that Schwab's VISA is actually issued by FIA Card Services, a subsidiary of Bank of America!

"Got to "love" BofA. They raised my interest rate because 'you never use the card'"

Sounds like they are sulking because you refuse to play their game. But, it's not your fault that their credit cards' features are not attractive enough.

I'm a customer of Bank of America, mainly because I've had a checking account with them for a number of years, it's free, and they do have the best online banking and bill pay services. But, I don't use their credit cards because there are plenty of other cards out there with better "perks".

It's the same with savings accounts. Why open a savings account with Bank of America, Chase, or any other big bank? They pay almost zero interest. Why they even bother to offer them, beats me.

I jumped ship from BoA years ago, and I couldn't be happier with my credit union. I'm sure I've mentioned it somewhere already, but I get 2-6% interest on my checking and savings accounts, which trumps any percentage BoA ever offered me. Still only 1% foreign transaction fee, along with amazing customer service and online banking. I believe there is absolutely no reason to bank with a big bank like BoA.

I, too, am a BofA customer. At a BNP Paribas ATM in Paris last month I was charged two fees. When I got home I called the customer service # on the back of the card. The fees have been removed. The fees were a mistake. Just call the bank.

This thread has been really helpful, especially what Swan just wrote...I'm a BoA customer too and spent an hour at my branch just now. When we were in Paris in '08 we were charged two fees just like Swan said even though we always used BNP ATM's. One was a conversion/transaction fee and I never found out what the other was for. I meant to go to BoA and find out after our trip but never did. Today I wanted to find out about all this I'm reading here cuz we're going to Paris again next month. Manager said they will go back and look at the fees I was charged in '08 and refund any that I shouldn't have been charged. I checked with Wells Fargo and a local bank, and they both charge 1% conversion fee as well but also a fee to use ATM's as they have no affiliation with European banks. So for me, BoA is still my best choice (even though I hate BoA too). It's too late now to open an account with Schwab, it's cutting it too close.

Support Bo! I use a local city credit union debit card at European ATMs with no CU mark-up. I also have one of their CCs. I do have two different BofA cc's. Each one tied to airline milage programs. I WILL start reading all the junk they send me in my bill each month. In the mean time, we all need to start looking around and report back.

Michael, I don't know who you "checked with" but my BofA VISA charges a 3% foreign transaction fee. That is what is actually charged on my statement.

Maybe there are different kinds of BofA cards that charge different amounts?

"Tyler please use the right rates. Don't no where your getting them but checked Wells Fargo and BOA and they are 1.33."

Not sure what you mean. You mean the exchange rate for Euros? It varies every day.

Today, it's around 1.28 if you withdraw from an ATM in Europe. But, if you buy cash Euros here -- from, like, Bank of America or Wells Fargo -- you will pay around five to 6 percent more. Like, if you look at Bank of America's website, their rate today 1.3359.

Go here to get an approximate idea of what your exchange rate will be if your withdraw in Europe from ATMs.

http://corporate.visa.com/pd/consumer_services/consumer_ex_rates.jsp

To Bo, perhaps you could pursue the fraudulent fees through your state's banking commission? Put everything in writing, and just that first step might get your fees refunded. What jerks.