As if there weren't already enough nickeling-and-diming that travelers need to watch out for, along comes the latest gouge: Many banks are charging exorbitant fees when travelers use their credit cards overseas.

In fact, you can get hit with these surcharges if you withdraw cash from foreign ATMs or even when you pay for your travel arrangements in the United States.

When I returned from Italy last fall, I noticed that my bank, JPMorgan Chase, had charged me $14 for withdrawing the euro equivalent of $300 from an ATM in Florence. That's a 4.7 percent currency-conversion rate. I also saw that my credit card, a Citibank MasterCard, had upped its conversion fee from one percent to three percent. That's better than 4.7 percent but still three percent more than I would have paid had I planned better.

Then I started hearing from incensed travelers. Some had paid in dollars but were charged a fee anyway. A Condé Nast Traveler staffer who stayed at the Four Seasons in Uruguay, for instance, was billed in dollars, yet her MBNA MasterCard charged her a $17 fee. Others had been hit with a foreign-transaction fee when booking online in the United States. One co-worker was charged a three percent fee for using Air Canada's Web site to book a flight to Canada (the site for U.S. customers charges in Canadian dollars, which is what triggered the fee). But wait: It gets worse. Some travelers have incurred a fee even though they paid in U.S. dollars before they left home. One colleague was charged three percent for a deposit on a hotel room in the Caribbean, even though the hotel quoted him a U.S.-dollar price. Several travelers who booked sailings on Oceania Cruises and MSC Cruises, and paid in dollars, were assessed a three percent fee by their credit card companies.

What's going on? First, many banks have increased their currency-conversion surcharges by tacking on an extra two percent to the one percent that Visa and MasterCard have levied for years. The two percent add-on is nothing but a gouge, says BankRate.com credit card expert Kristin Arnold. "Visa and MasterCard are the ones that convert the money into U.S. currency," Arnold explains, "so by the time a charge hits Chase or MBNA or Citibank, the bank does no work. It adds on two percent for no reason other than to make more money."

Second, certain banks are now breaking out conversion fees into separate line items rather than bundling them into the purchase price. Thus the fees are more noticeable. Banks did this in response to lawsuits charging that the bundling is deceptive.

And third, some banks have renamed the currency-conversion fee a "foreign transaction fee" so they can levy it on purchases made in U.S. dollars. This means that even if you pay in dollars from home, your bank could bill you an extra three percent if the vendor processes the payment through an overseas bank—as that Caribbean hotel and those cruise lines did. "This fee is really unfair," says Linda Sherry, spokeswoman for Consumer Action, an advocacy group that studies the credit card industry. "For the banks, the fee is pure profit."

But such bank fees are just part of the story. A growing number of companies abroad—from Harrods to Starwood to Hertz—are offering to charge customers' credit cards in dollars. A new technology called dynamic currency conversion enables them to bill travelers in their home currency—an apparent convenience that is in actuality a trap. "In a lot of countries, the exchange rate that merchants use is not regulated," says Arnold, "so they can apply virtually any rate they want." Moreover, if your credit card charges a three percent fee for foreign purchases made in U.S. dollars, you will get hit with that fee on top of the conversion loss you've already incurred. "All the different conversion costs together can easily increase the price you pay by ten percent," warns Arnold.