NEW YORK (MainStreet) — Credit card companies finally seem to be genuinely interested in cutting fees these days. The latest item on the hit list is the foreign exchange fees that issuers place on purchases made overseas, which can add up to 3% of every transaction.
While 90% of bank debit cards and 60% of credit cards have foreign exchange fees, according to a study this year by the Pew Trusts, the fees aren’t uniform.
On its web site, Citi (Stock Quote: C) explains how and why it charges foreign exchange fees on its “Simplicity” credit card:
“Transaction Fee for Foreign Purchases: The pricing information table shows the amount of this fee (3% of each purchase transaction in U.S. dollars), which is a percentage of the U.S. dollar amount of the purchase. We add this fee for each purchase made outside the U.S., whether made in U.S. dollars or in a foreign currency."
American Express (Stock Quote: AXP) doesn’t have any “add-on” fees, but it does charge customers a flat 2.7% foreign exchange fee.
For select customers, issuers are cutting those foreign exchange fees. In Amex’s case, that means Platinum Card and Centurion Card customers are in effect getting a full 2.7% price break on foreign purchases. The fee cut goes into effect in March 2011, Amex reports.
The New York Times reported that card companies are only curbing foreign currency exchange fees for high-end customers, and are dragging their feet on reducing them for all customers, who may be asked to pay higher annual fees to use their cards abroad.