Foreign Transaction Fees Interview with WCCO Radio Minnesota
On Wednesday, April 1, 2015, CreditCards.com Senior Industry Analyst Matt Schulz spoke with John Hines of WCCO Radio Minnesota about the results of the April 2015 Foreign Transaction Fees survey. The interview and transcript are below.
John Hines: 10:37, mid-morning money, taking a look at something especially more and more folks get to this time of year, they start to think about or talk about traveling abroad. Taking a look at their credit cards, we find out that number of credit cards, not all but many, not even most, but many charge a transaction fee if you’re doing business in a foreign place, foreign country. They refer to it as “No transaction fee credit cards” versus those that have them. Matt Schulz joins me. He is the CreditCards.com’s Senior Industry Analyst, talking a little bit about this. Hey, good morning Matt, how are you doing?
Matt Schulz: I’m doing great, thanks.
Hines: We’ve had a chance to chat in the past about credit cards and the like, you understand credit cards. How many companies do, how companies don’t, can you break this down for us?
Schulz: We looked at twelve of the biggest credit card issuers in the country and what we found that about 1 out of every 3 credit cards doesn’t include one of these foreign transaction fees. That’s an increase from recent years, but we also found that there are four big issuers – Capital One, Pentagon Federal Credit Union, HSBC, and Discover – that don’t charge this fee on any of their consumer credit cards so that’s good news.
Hines: How much are the fees? So if I purchase something for $1,000 and I’m traveling, I’ll use Ireland as an example, what are they going to slap on to me for a fee if my company has that?
Schulz: Typically if there is one of these fees it’s about 2 or 3%, and that may not sound like much, but if you’re going overseas and spending $5-10,000, that can add up to a couple of hundred bucks.
Hines: If you have one of those cards that has a fee, can you call and ask them to waive it or do something like that, get it changed in this situation?
Schulz: You certainly can try. We’ve done surveys in the past where we’ve talked to people about being able to negotiate various fees and interest rates and that sort of thing, and we’ve always been surprised by the success rate. But we haven’t specifically asked about it, but it certainly couldn’t hurt to try.
Hines: There’s one example listed here, American Express holders are charged 2.7% so if you’re spending a grand somewhere, now you’re spending an extra $27 because of that fee. Is it worth it, and Matt you understand credit cards better than I do for sure, is it worth it to go out and get a card that doesn’t have such a fee, like a Capital One or a HSBC, Discover, Pentagon Federal Credit Union? Is it worth it to change cards to take out a new card?
Schulz: It certainly can be, especially if you’re looking at taking a big family trip overseas because it can really save you a significant amount of money. Of course you have to make sure that you can handle it properly, that you’re not going to go spending crazy with the new card or anything like that, but if you will be cautious with it, it can be a really good idea.
Hines: Is this on the increase or is this something that’s starting to go away more and more?
Schulz: More and more cards are doing away with these foreign transaction fees and it’s just a sign of how competitive the credit card market place is now. The economy’s a little better, people are spending a little more, there’s a real fight going on to get these really good customers and people who travel overseas a little tend to be a little more affluent and those are the folks who the credit card issuers would want.
Hines: Sure, I suppose. But ya know, we’re back to this whole thing, too – we’ve talked about this on the show before – credit card companies know who those customers are, right? I mean, just by checking – we’ve said this before – that everything that’s happening, everything that’s going on around us, is all based on algorithms, so credit card companies know who those overseas travelers are, and they’re going to market a no fee card to those people specifically.
Schulz: Yeah, absolutely. And also to folks with good credit scores because as with any credit card the best terms of conditions, the best rewards, the fewest fees are always reserved for those folks who have the best credit.
Hines: I would be surprised if when you go to book an airline flight – just because of the way communication works via the internet – that when you book an overseas flight or you book a rental car somewhere in another country or make a hotel reservation, they’re going to light up, it’s going to light up on their email or internet inbox, their awareness and they’re going to go, “Hey, here’s a person who’s traveling overseas. We should perhaps market a card to that person.”
Schulz: Yeah, quite possibly and they also monitor your transactions to monitor your transactions to keep an eye for fraud and that sort of thing, if anything unusual appears. So yeah – they’re keeping an eye on what you’re spending.
Hines: Alright. Hey Matt Schulz, always a pleasure to have a chance to talk with you from CreditCards.com. He’s the Senior Industry Analyst there, Matt Schulz on WCCO Radio. You have a great day!
Schulz: You too, thanks a lot.
Hines: It’s 10:44, time to search for custom replacement windows, search Wellington Home Improvements here, WCCO.