5 On Your Side

Beware of foreign transaction fees

Posted September 2, 2009

— Consumers traveling outside of the United States are likely familiar with foreign transaction fees. But as Raleigh resident Sheila Beal found out, you might still have to pay the fee even if you never leave the country.

“It was beautiful. I really learned a lot about Alaska,” Beal said of her trip to Alaska.

However, the trip also taught her about credit card fees, specifically foreign transaction fees. After she paid for the vacation, $259 worth of foreign transaction fees appeared on her credit card bill.

“For the life of me, I couldn't think of anything we had purchased internationally that would have created this foreign transaction fee,” Beal said.

When Beal called the credit card company, she was told the fees steamed from her Alaska vacation. However, the travel agency she booked the vacation through was based in Texas, they flew on American Airlines and cruised in Alaska.

“The cruise company banks in Ireland, so that initiated the foreign transaction fee,” Beal said she later learned.

The credit card company told her that when a company banks in a foreign country, under their policy, they can add a fee of up to 3 percent of a charge.

“I don't think it is right at all,” Beal said.

Complaints over foreign transaction fees are rampant on the Internet. LowCards.com recently posted an online warning about the fees.

Bill Hardekopf, CEO of LowCards.com, told WRAL’s 5 on Your Side that while many credit card issuers list the fee in their policies; until recently, most only added it to charges made outside the country. But he said some credit card issuers have since expanded the fee to transactions processed outside the U.S.

However, Nessa Feddis, a spokeswoman for the American Bankers Association, said credit card issuers have always charged the fee because foreign transactions cost more. She said what is "rare" about Beal's case is that a U.S.-based company used a foreign bank. She said those rarities always involve Internet transactions.

Beal said she sees the fee as nothing more than a money maker for credit card companies.

“This is a shady fee,” she said. “It's padding the credit card company's pocket."

The cruise line has since refunded Beal's $259.

If something like this happens to you, contact your credit card company and explain you were in the U.S. when you made the transaction. If that doesn't work, call the merchant.


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  • prn13norm Sep 8, 2009

    I recently sold a house and lessened my debt by almost $200,000. with the profit I paid off two outstanding credit card bills in full and paid off half my balance owed on my Bank of America Credit Card. I then called Bank of America to see if my credit line interest rate could be reduced due to my recent debt reduction. Not only did they not reduce my credit line interest rate they proceeded to cut my credit limit on the credit line account by $12,000, close a credit card I had with no balance owed and cut my other existing credit card limit in half. This card I have had for over 30 years. NEVER have I been late or missed a payment on any account in my entire life! I intend to pay off these accounts then tell Bank of America what they can do with their credit.
    The Banks are the "Robber Barons" of this century!

  • drh3102 Sep 3, 2009

    I would like to know the name of the cruise line and if there are any other cruise lines that do this. I think this is necessary information in order to complete the story.

  • ranquick Sep 2, 2009

    Until the Feds take control of this we will continue to be killed by these fees and interest, what kills me is the Feds loan money a t a very low interest rate and then they charge VERY VERY HIGH interest, how in the worl can they ask for Bailout at the rates they charge, I think the Fed need to put a reg out saying if you borrow from Feds you can;t charge more than 10% what we charge you.

  • tpbwetland Sep 2, 2009

    The Alaskan cruise ship line has some banking transactions in Ireland, therefore your stay in Alaska occurs in a foreign country. Everything I purchased in the last 3 years was produced in a factory in Mexico or China. Does that mean the next credit card transaction I make at my local grocery store around the corner, my credit card institution will charge me a 4% foreign transaction fee? You bet your life they will! What has gone wrong with country? We have turned into a corpocracy where socialism, entitlements, and corporate welfare run wild for the rich, while the rest of us middle class fall further and further behind in capitalism. We have decided to only use cash for now on, anyway. Why give the stealing banks another reason to steal from us?!