November 19, 2008
AmEx Ups Foreign-Purchase Fees
by Wendy Perrin
Warning to American Express cardholders: Starting Jan 1, 2009, the fee you'll be charged when you buy something in a foreign currency will be 2.7% (rather than the 2% it's been for years).
As a reminder, the way to avoid foreign-transaction fees is with a Capital One card. You don't have to make Capital One your main bank: You can open up a small savings account just to get the card and use it only on your trips overseas. If anyone has a fee-avoidance recommendation other than Capital One, I'd love to hear it. Please just click on "Comments" below and let me know.
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Thanks for letting us know about the charge increase, Wendy. I've only heard to use Capital One as well to avoid charges. I learned the hard way about using AmEx overseas!
Posted by: travellove | November 19, 2008 at 10:56 AM
When I am in Europe I follow the Euro rate closely. I have noticed that both Amex and Mastercard charge way more than the published Euro rates for the day. Amex I believe charges even more than Mastercard. I think charging retail conversion rates, and on top of 1-2% charges, is scandalous.
Posted by: maggie323 | November 19, 2008 at 01:16 PM
I rarely used my Amex overseas when it was 2 percent. Now it'll get used none at 2.7%. That's a really dumb decision as it puts them right in line with all the no-annual-fee Visas and Mastercards out there charging 3%.
Yes, I have a Capital One card and it's the only one I use abroad, which means Amex is losing out on thousands of dollars in charges over the course of a year. Plus their merchants are getting charged more too, so often that hurts your bargaining power when shopping.
Posted by: globetrots | November 19, 2008 at 06:02 PM
this upcharge plus the fact that they are dropping the "always double" miles on the Delta Amex in January is the kiss of death for Amex. The Capital One miles end up being more versatile to use anyway as true "miles" get more and more worthless.
Posted by: Tellurian | November 19, 2008 at 07:32 PM
Use a card that you trust to back you should an overseas purchase go bad. I was lucky and that lesson only cost me a couple hundred bucks for some pottery and not a couple thousand for a rug. Needless to say, my Cap One card went into the shredder and I don't complain about paying an extra fee to use Am Ex!
Posted by: travelgal | November 19, 2008 at 10:47 PM
Dear Wendy..thanks to you I am securing my Capital One card right now...fyi...they say no savings account needed!! A BIG mistake by Amex whom I have used for years- am sure other cards may follow suit...thank you for this great Perrin Post tip!
Posted by: phoebeweinberg | November 21, 2008 at 12:12 PM
Thanks, Phoebe, for pointing out my slip-up. Clearly I'm not getting enough sleep! (Been working 'round the clock on a big-deal feature in Conde Nast Traveler's upcoming January issue, which just shipped to the printer yesterday...which means hopefully this weekend I can recover!)
True, you do NOT need a savings account to get a Capital One credit card. You DO need one to get a Capital One ATM card, which is what I recommend for withdrawing cash overseas. That way you can avoid currency-exchange fees on your ATM withdrawals as well. (You're limited, though, to $500 per day.)
I'm so accustomed to recommending that travelers get BOTH the credit card AND the ATM card, which is why I brought up setting up the savings account.
Posted by: WendyPerrin | November 22, 2008 at 09:04 AM
I hadn't considered getting the ATM card -- that's a great tip. The limit is so low on the Visa that Capitol One gave us that it covers almost none of our expenses when we travel.
We also have an account at a local credit union that does not charge fees for using the ATM, and that works well for getting cash.
Debbie
http://www.deliciousbaby.com
making travel with kids fun
Posted by: debbied | November 23, 2008 at 11:31 AM
If you've got an ATM card through your credit union that lets you withdraw cash overseas at no charge, then that's great and you don't need the Capital One debit card in addition.
Alas, my main bank that I must use because that's where Conde Nast deposits my paychecks--J.P. Morgan Chase--charges $3 every time I make an overseas withdrawal, PLUS 3% of the amount I withdraw. THAT's the sort of highway robbery you need to avoid, and many smaller local banks and credit unions provide ATM cards with no such fees.
Posted by: WendyPerrin | November 24, 2008 at 07:37 AM
Schwab has just come out with a new Visa that charges no (0%) foreign-exchange fees, and rebates 2% on all purchases. They also have an ATM card (tied to a Schwab checking account) that rebates all ATM fees worldwide. The ATM card has (when we used it last overseas in Sept) a $1000 limit per card per day for ATM withdrawals (up to $2K per day per account, if it's a joint checking account). These seem like the perfect travel tools.
Posted by: KenTravel | December 24, 2008 at 01:57 PM
Your recommendation regarding Capital One cards for foreign travel. We already have a credit card. If we open a savings account will we get a separate debit card to use at ATMs or can the cards be combined?
Posted by: kwmwyn | January 03, 2009 at 11:48 AM