Banks have sneaky fees and this is one of them. The amount charged on forex fees is scandalous and people need to start getting credit cards lie the 28 Degrees mastercard (no forex fees and bank currency exchange rates) to convince banks to end the feeding frenzy.
I find the issue you have described as well as the same issue faced by travellers one big rort.
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We purchase software online, mainly from America, and our bank charges us this fee. It is a different bank. However, given we are not paying GST it does not bother me and it is always a very minute amount, like under a few dollars. If it were more I guess Iād be screaming.
I started looking around for another credit card after my primary card provider (Citibank) advised a few months ago that they were adding a conversion fee surcharge (about 3 - 3.5%) to overseas purchases, even if they were billed in $AUS.
I agree the 28 Degrees Mastercard is great - it was one of the two previously recommended in CHOICE; there are no annual or transaction fees (except for ATM withdrawals) and the transaction rates are the official Mastercard conversion rates on that day - the other ānon-feeā card recommended actually provides a currency conversion rate of about 3 to 3.5 percent lower, so donāt be tempted!
If you are going overseas, or buying overseas from Australia, I recommend you get one of these cards as it will effectively cost you nothing (unless you get cash withdrawals. Aside from using an exchange agent to transfer $AUD overseas, this is probably the best option to use travelling, or just to puchase from any overseas merchant.
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Amazingly, none of you, including the Choice article, have mentioned the real reason for the banks behaving this way. Itās to counter DCC. (If you donāt know what DCC is, read something like this discussion on Flyertalk.)
Our banking system and many others allow DCC, pretending it will benefit customers, when in practice it does not. The ACCC actually forced DCC to be allowed in Australia, so that the banks can rip off overseas tourists, just the same way we can be ripped off when we go overseas!
That said, the banks here make no attempt to work out which transactions are DCC from overseas and which are Australian retailers using overseas processing. They simply hit everyone with the fee indiscriminately. But youāre never going to get far in solving the problem when you donāt even mention, let alone understand, what causes it.
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By the way, there is one way to avoid all this. Use American Express.
Amex doesnāt allow DCC and Amex consequently doesnāt charge for foreign transactions in AUD.
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The one guarantee when you see an xrate offer pop up on a card terminal for your acceptance when using a foreign issued card in Australia is that it will be by far the worst xrate you could get if you actively sought it out. The banks claim it provides the customer with immediate certainty. That would be immediate certainty of what a bad deal the xrate is. The way it is presented implies if you do not accept the rip off xrate the charge will not go through, even though it will. Many sales people think they have to push āyesā to use the card. Selecting āNoā is the smart answer.
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Facebook has ads?
Clearly youāre not using uBlock Origin!
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Thanks for the feedback @craig1, Iāll be sure to pass it on. We have covered DCC in some of our travel articles, but weāre aware this can happen when shopping online too.
I have just seen the posts about 28 Degrees Mastercard, and decided to applyā¦I have just read the Privacy Document, and it appears to me that they will obtain personal information about you from any source and supply it to any company or person that cares to pay for it. This includes medical information to an insurance company, and possible a con artist in Nigeria. I could be misinterpreting it, but it certainly looks that way.
Same. Just bought something on Amazon in AUD and got charged a $3 international transaction fee. I donāt get itš¤
But is it any different from any other credit card or credit arrangement? Or even most apps on your smart phone? - they all require you to almost sign your life away.
If you value your privacy, donāt use any electronic methods of financial transaction and just use cash!
Hi Albie,
Iām not sure what you are saying āsameā to, but please read my posts about credit cards and fees. Your credit card probably says that they can charge you for international transactions even if they are in $AUD.
I believe CHOICE should look into the āInternational Transaction Feesā issue, especially when the charges are in $AUD; and particularly when my CC bank states that āIt may not always be clear that the merchant or its financial institution/payment processor is located outside Australia.ā
I think these fees may be illegal, just as other bank fees have been found to be. But Iām not a lawyer.
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This is one of the classics about EULAs that virtually nobody reads -
Same is an abbreviated way of saying āI have had a similar experienceā
I recently made two (separate) bookings on Airbnb. Both are for accommodation in Australia, owned by Australian residents and quoted in AUD. The PayPal receipts showed the same AUD amounts. However, my bank statements showed them both several dollars more. Given I was quoted in AUD for accommodation in Australia and Paypal says it was taking that amount in AUD, I think it is entirely misleading that I should be charged more by the bank. How can I tell how much the accommodation is going to cost if it is only after I have paid that I find out about fees?
And what recourse have I got?
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Change banks. A rellie just opened a Citi account because it does not have those fees. He might find something else to gouge him, but it will not be exchange or offshore processing fees. In the early days he has not yet found it.
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Thanks TheBBG. I might do that!
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Wow, didnāt realise this thread had received such a response hahaā¦ Anyway I wish you were correct in your statement about amex not charging for foreign txns in AUD, but itās not the case. I regularly use my bank-issued amex linked to paypal and am charged the 3% fee every time the apparently Aussie seller turns out to have an overseas account.
In response to your amazement at not many people knowing what DCC is, I donāt either! While youāre right in that it helps to understand the mechanisms behind these fees, itās not our job as consumers to figure all of this out. The bottom line is, if a bank is going to charge a fee on a transaction, that fee should be disclosed at the checkout BEFORE you commit to the transaction.
Sorry if you were confused by my statement. American Express still does not change for foreign transactions made in AUD. They define the charge as āCurrency Conversion Fee: Payable when any charge is processed in a currency other than Australian dollars.ā Link a real Amex card to your Paypal and youāll see none of those fees.
If you have a bank-issued card with the Amex label on it then, yes, that bank makes the rules and can rip you off, I guess. Iāve never looked at the bank-issued T&C because the Amex-issued Amex cards are vastly better products anyhow, have better customer service and have lower fees.
Ah right. I do have an Amex-issued card but itās the basic one so the points arenāt great (I only have it for the monthly deals). My bank-issued Amex is a premium one with significant points - nets me exactly 1.5% cashback in the form of Coles gift cards. (thereās no annual fee as Iām stuck with them as a home loan customer).
If you havenāt looked into bank-issued Amex, you should check it out. There are often some great deals via Amex Connect, only available to bank-issued cards. Two examples of this Iāve used recently are ā$100 off a $300 spend at Harvey Normanā which got me a 1TB Xbox One bundle for $200 and ā$30 off a $150 spend at First Choice Liquorā. Best thing about these Amex deals is they can easily be stacked with other specials and discounts offered by the store.
