Clark Howard's Tips

Banks and their excuses for overseas fees

August 19, 2005

Many big banks are dominating the credit card business, and their fees are so high it's embarrassing.

These astronomical fees are creating opportunities for smaller businesses and credit unions.

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A reporter for the New York Times called major credit card issuers and asked about the fees for using a credit card overseas. He said it was not easy to get answers, but the funniest responses were why the fees existed at all. The most honest answer was that the bank needed to make more money.

The truth is that traditionally you are charged for the bankers buying rate plus a 1 percent conversion fee.

Just remember that banks have to tell you the fees they charge for overseas charges or they can be sued.

Several years ago banks started charging up to 5 percent for absolutely no reason.

Clark wants you to find out your credit card's conversion fees before traveling overseas. He says most smaller issuers and credit unions will not charge ripoff fees and to use those cards if you can.

More Clark Howard Credit and Banking Tips The dangers of home-equity borrowing  ID checks, minimum purchase rules a no-no with credit cards  The Mortgage Lender Implode-O-Meter  Advance-fee loans are back with a vengeance  Wachovia, WaMu say goodbye to option payment loans  Cycling your unused credit cards back into the mix  Banks offer diverging interest rates on savings and CDs  Mortgage bailout proposal to help banks, not homeowners  Credit limits being reduced without your knowledge?!  65 million paying for credit monitoring/fraud alert services  Full list