Watch out for credit-card fees abroad
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Credit cards are convenient and offer a lot of protection when purchasing disputes arise, but using the cards abroad may be more expensive than you think.
Most credit card companies collect fees equal to at least 3 percent of a total foreign transaction, but few consumers know about them because the surcharges aren't broken out anywhere on the customer bill.
David Johnson of Concord stumbled across the fees by accident on a trip to Mexico in January. He and his wife decided to buy a lifetime membership to a club in Playa del Carmen for a little over $8,000. Johnson charged the membership to his Citibank card but later decided to cancel it. The club promptly issued a refund, but when Johnson received his credit card statement he noticed the refund was about $140 less than the initial charge.
Johnson contacted Citibank for an explanation and discovered a drop in the value of the dollar had caused the differential. But he also learned something that surprised him, that Visa had charged him 1 percent of the transaction as a foreign currency processing fee and Citibank had charged him 2 percent to cover its administrative costs.
The $245 in foreign transaction fees were returned to Johnson in his refund, but Visa officials say that's not always the case. Sometimes, they say, the fees are assessed when the transaction is initiated and again when it's reversed.
"I wonder if other folks know about this," said an incredulous Johnson. "This fee doesn't show up as a line item on one's monthly statement, but rather is included in the currency conversion."
Citibank spokeswoman Maria Mendler said the fees are disclosed in the initial disclosure statement customers receive and also in the terms and conditions for their credit card. She said Citibank's fee is necessary to cover the company's higher processing and administrative costs in dealing with foreign merchants.
Not all banks charge a foreign transaction fee, but most do. According to Bankrate.com, Capital One, MBNA, First Union, and SunTrust have no charge. But Bank of America, Citibank, Chase, Bank One, Wells Fargo, Providian, and American Express all charge 2 to 3 percent.
Even with the fees, bank officials and analysts at Bankrate.com say most purchases made abroad with credit cards are usually cheaper than with alternative forms of payment. They say the bulk transactions handled by Visa and MasterCard enable the companies to secure better rates than individuals can get exchanging money at banks or retrieving cash from automated teller machines.
But that's little consolation to Johnson, who thinks the fees and the circumstances under which they are assessed should be spelled out more clearly to consumers.
A California judge last month agreed with him. In a preliminary ruling, Alameda County Superior Court Judge Ronald Sabraw said Visa and MasterCard had not done enough to require member banks to disclose their 1 percent fee to customers and should issue refunds worth an estimated $500 million dating to 1996.
A spokeswoman for Visa said the fees were disclosed properly. She said Visa had raised objections to the rulings earlier this month and was hoping the judge's final ruling, due by June, will be different.
Mendler said it was too early to say whether the case would have any impact on disclosure practices at Citibank.
Logan DVD store
Travelers looking to ease the boredom of a flight can now rent DVDs and portable DVD players at Logan International Airport.
Inmotion Pictures of Jacksonville, Fla., just opened a store at Terminal C offering one-way, round-trip, and daily rentals. Prices are a bit steep, but still reasonable considering the movie selection, viewing flexibility, and sound and picture quality.
A one-way rental between any of the 18 cities served by Inmotion is $12 for a 5-inch player and a movie or $15 for a 7-inch player and a movie. Round-trip rentals are $12 or $15 a day. Those with DVD-capable laptops can rent a movie for five days for $5.
If you're flying to a city not served by Inmotion, you can still rent the equipment, but you'll have to pay fairly hefty shipping charges to get the unit back to Inmotion. An Inmotion spokesman said the company opened its Logan store because the Boston area was the top source of these so-called jet-back shipments.
The laptops rented by Inmotion are geared for use by two passengers. They offer DVD-quality pictures and sound and let users stop and start the movie when they want. Unlike airline movies, which typically cost $5, films rented by Inmotion are not edited for content.
Green backed
Even with parking rates increasing at T.F. Green Airport in Warwick, R.I. (Sensible Traveler, March 9), several readers said they still prefer it to Logan.
One reader, who declined to give his name, suggested driving to the Bonanza Bus Lines terminal in Providence and taking the bus to the airport from there. He said parking is tight, but it's free.
Bill Dennehy of Hanover said the cheaper Southwest Airlines fares available at Green and the ease of access make the airport the better bet for him.
"I'll give Green another seven to 10 years before it becomes another Logan," he said, predicting the airport will become a victim of its own success. "Until then, I'll fly out of there."
Bruce Mohl can be reached at mohl@globe.com.
