International purchases: Capital One IS no fee

I would prefer to post this out on the Europe board, but they have split it into these three boards instead.

I called Capital One and verified with their customer service today that they do NOT charge the usual 3% fee for international purchases.

I read on another thread that most credit cards do, and checked my BofA Visa online, because I had charged some UK National Express bus tickets online. Sure enough, there was a separate charge for 3%.

So, I applied for a Capital One credit card today onine. Took about 30 seconds. It takes 2 - 3 weeks to get the cards, so if you're going to Europe within the month you might want to do this now.

We will be charging pre and post cruise hotels and food, car fuel, rental car, etc. and I'm not happy about paying an extra 3% in ENGLAND!!! Already expensive enough as it is.

You are absolutely correct! I have never been charged a fee for using my Cap One card in Europe. What more can use ask for, low interest rates if you don't pay off each month, no fees for charging overseas, and I have a mileage one account that gives me 1 air mile for every $ charged. They can be used on any airline anytime!

Just be sure to tell them in advance when you are going and when you will return to ensure a charge doesn't get refused.

Cheers,

I have heard a rumor that while Capital One does not charge a separate "broken out" fee as other cards do that they use a different exchange rate & therefore the net result (which is all we care about, right?) is more or less (or totally) the same. I wonder if someone who has both types of cards (Capital One & another that charges a fee) would be willing to charge two identical purchases on the same day at the same merchant overseas and compare the result for us.

I've really been curious because it has always been stated that credit union ATM cards do not charge a fee while most banks charge a 1% fee to withdraw from an ATM. I was curious about this and last year in Ireland, from the same ATM in consecutive transactions, I withdrew the same number of euros using a credit union ATM card that I had confirmed had no fee as well as my TDBanknorth ATM card which I had confirmed had a 1% conversion fee.

When I got home and compared the actual amount taken from my checking account, they were identical to the penny - because the credit union incorporated their fee into their exchange rate while the bank (I guess you could say) was more honest about it and admitted that they were charging a fee. All the while I was thinking I was getting a better deal with the credit union ATM card and I wasn't. Granted I can't say that the same is true of every bank and every credit union but it sure opened my eyes to the fact that there are many ways to calculate an exchange rate and all are not created equally.

I don't have a Capital One card or I would have attempted the same experiment with credit cards, so I'm hoping that maybe someone can give it a try. It IS hard to believe that Capital One is forfeiting a fee that almost every other bank is reaping out of the goodness of its heart, but maybe it's true and I know I'd appreciate knowing this for sure. ;)

I called Capital One customer service back again today. I asked specifically what fees they DO charge, and she read their policy to me over the phone. They charge ONLY the conversion rate of the day to convert to US dollars. The merchant overseas may charge to use a Visa card, but Capital One adds on no additional fees or surcharges on top of the conversion rate.

So, if the fee is being charge using a Capital One card, then it is the merchant.

Online applied and was approved and said it would take 7-9 days to receive..we leave in a month

Marlene

Thank you so much for that valuable information. We use our credit card when we go on vacation and, as you say, there is usually a service charge.

:)

I was ready to apply for a Capital One card, but then I decided to check on my Macy's Visa card. They charge 1% for international purchases, and you get Macy's gift certificates that equal 1% of purchases on the Visa part of the card.

Is Capital One free? or does it have an annual fee?

Hi Pcur, I think maybe you are missing my point, which is that I am certain Capital One does not tack on an itemized service charge, that's been verified enough times. However, if their "conversion rate of the day" as you call it is a worse "conversion rate of the day" than other credit cards use, it may not matter. There are multitudinous conversion rates in use at any given time. If you buy currency at an exchange bureau, for example, you get a certain conversion rate. If you immediately wanted to sell that currency back to the exchange bureau, you get a different conversion rate. Capital One's conversion rate may not be the same conversion rate as Bank A's which may not be the same as Bank B's and so forth. It has nothing to do with the merchant.

This is why I honestly feel that the only way to get a handle on the situation is if someone charges the same identical item in the same store on the same day using a Capital One card for one purchase and some other charge card for the other purchase - the same experiment I ran using two different ATM cards, one of which has a service fee, and one of which does not. The amounts withdrawn from my checking account were identical, because the credit union ATM used one exchange rate, and the bank used a BETTER exchange rate but added a service charge, making the out of pocket amounts identical.

To look at it another way, for sake of argument, if you buy something for $105 in a state that incorporates its sales tax directly onto the tagged price or something for $100 in a state with 5% sales tax separately itemized on your cash register receipt, the cash in your wallet is reduced by the same amount. :D

I'm probably muddying the waters with my examples - but I honestly don't feel that Capital One could possibly be, out of the goodness of its corporate heart, forfeiting an opportunity to earn fees on foreign purchases by its customers. It's getting the money somewhere. I guess if no one volunteers I'll have to get a card myself and run my experiment!

Trece:

I understood exactly what you said the first time. I too am curious. There's nothing for free out there today. And with all banking and credit card institutions charging all kinds of fees to increase their revenues, makes one really wonder how it is that Capital One manages to not have such fees when everybody else is doing it.

Thanks Rienreiter, I appreciate knowing I could pose the question understandably. DH and I won't be going away again until the fall but I'll apply for a card if I have to to find out. I could really be totally off base in my thought, but after the ATM experiment I'm very curious.

I have a friend who won't buy an item at $10 but if the identical item is 50% off $20 she thinks she's getting a bargain. I'm wondering if the same is true of Capital One, that they realize by marketing no added conversion fee but slyly using a worse exchange rate that people think they are getting a bargain. I COULD BE WRONG! But it's maddening not to know. :D

Trece: I appreciate the question. This is from Capital One's FAQ:

"Capital One does not charge a fee for using your credit card for foreign currency transactions. Foreign purchases will be converted at the foreign exchange rate in effect at the time of posting the charge. Typically other credit card issuers charge a fee between 2% and 3% of the purchase amount."

Here is an excellent link with comparisons of credit card and debit card suppliers: http://flyertalk.com/wiki/index.php/Credit/Debit/ATM_Cards_and_Foreign_Exchange

From the above link: "For most transactions in foreign currency on a US-issued card, Visa and MC will tack on a 1% charge. A few banks/card-issuers "eat" the fee (notably CapitalOne). Most pass it on either as a line item on your statement or "built in" to the exchange rate."

I do not think that Capital One "eats" the expense out of the goodness of their heart. I assume it is a competitive advantage to them and that they earn enough on other fees and interest charges to make up for this perk.

AltaJoe: Capital One has at least some credit cards with no annual fees.

AltaJoe: Capital One has at least some credit cards with no annual fees.

Thanks.

Whogo, I have read at least some of what you sent before but I do want to read it again (which I haven't yet!) but I just want to point out that your first paragraph quoting Capital One still refers to "the foreign exchange rate in effect at the time of posting of the charge." There is no such animal, to my knowledge, as a "one size fits all, same rate in use by everyone" foreign exchange rate. If you apply for a variable rate mortgage, you will receive a strict definition in your closing documents of how that variable rate is calculated and what it's based on - and not every bank uses the same rate and the same formula to calculate increases in the variable rate. It's my theory (thus far unproven, I'll admit) that the foreign exchange rate used by Capital One vs. other banks is not necessarily the same foreign exchange rate. If you can show me in the Capital One documents and any other bank's documents their formula for calculating "foreign exchange rate" - I'd be thrilled because that's what I'm looking for. I'm not looking for the difference in the fees, or whether there is any fee - the credit cards make that pretty obvious. I want to be able to compare how they calculate their exchange rate.

Note that in the Wikipedia article in Flyertalk which you supplied, under the heading WHERE YOU CAN GET HIT WITH FEES - the 4th point is "by whoever calculates the actual exchange rate underlying everything." If the so-called exchange rate was a standardized rate that no credit card company or bank could tinker with, why would it say this? It's precisely because it's NOT a standardized rate that this 4th point even exists.

Trece: Capital One offers Visa cards. Capital One would use the same Visa network that other credit card suppliers use. The foreign exchange rate is set by the Visa network, not by Capital One or Citibank or the other card issuers. I have to trust Capital One on their no fee claim. They would lose more in lawsuits than they would make by cheating on the claim. See the link: https://www.ccfsettlement.com . I have seen Capital One recommended on so many sites by so many people that I think someone would have blown the whistle on any scam.

The way that the Visa network sets the foreign exchange rate remains a mystery to me, but it is lower than any other rate available to me.

Capital One also offers Mastercards. You may substitute "Mastercard" for "Visa" anywhere above.

Whogo, I've gotten all that settlement stuff in the mail myself. I guess we will have to agree to disagree that all exchange rates are created equally. I don't know how to incorporate a link in my post but I'm currently on Visa's website and under "Exchange rate for Foreign Currencies" a heading called "How Does Visa Calculate Its Rates" it says the following: "Visa makes this rate available to issuing banks, which may adjust the rate in billing cardholders." I'll admit to being way over my head here, but that to me sounds like each bank offering Visa has discretion in the exchange rate it charges its customers. Under a heading called "How Accurate Are the Rates" it says the following: "They are only meant to serve as an indication of the rate you could expect to receive (my emphasis) from your issuing bank." Again, this sounds like discretion is available to the issuing bank. Again - I could be wrong!

A scam to me is something illegal. I don't think Capital One is doing anything that is necessarily illegal. They are just promoting their "no added fee" mantra while - I'm guessing - not easily disclosing the fact that they may be making up all or part of that money by using a worse exchange rate.

I'll get my own card. I'll run my own experiment! :D

I have a friend who won't buy an item at $10 but if the identical item is 50% off $20 she thinks she's getting a bargain.

This is hysterical. It's amazing how gullible some people are. Ah, the power of marketing.

I'm curious about your Capital One test. By the time you get it and test it, we will all have forgotten about this thread. I am not convinced until the test proves otherwise.

Very interesting post...As far as determining the least expensive options for using CC's in the EU, let me add a wrinkle:

Would getting a card from a non US banking institution (that has a US presence, but is an international bank), such as HSBC change the "shake down" potential for a US user?

Any banking industry or finance majors out there that could enlighten us?

Very interesting post...As far as determining the least expensive options for using CC's in the EU, let me add a wrinkle:

Would getting a card from a non US banking institution (that has a US presence, but is an international bank), such as HSBC change the "shake down" potential for a US user?

Any banking industry or finance majors out there that could enlighten us?

The way I understand it is when you pay in a foreign currency, then the conversion rate comes into play at that time. Getting a foreign issued card doesn't change the fact that your payment is coming from a different source, and they will convert the funds to the local currency.

There is always the conversion factor in any transaction; that's not what I'm talking about. I'm talking about the 3% on top of that. I know I have to pay to convert the money, and I know my bank, or Capital One, or the merchant's bank may not all use the same conversion rate. If I'm not paying a 3% fee on top of all of that, then I'm happy. My BofA Visa DOES charge the 3%, so I'm ahead with Capital One.

I'm waiting for my card to arrive so I can make the remaining online transportation purchases with it.

No, no, no!!!!!!!!!!!!!!!!! All you have to do is search on this forum or any other that you choose and you will find discussions about how CapitalOne must be using a different rate so they can say there's no fee. In the end it's usually the people who haven't tried it who suggest this, and people who have tried it who say that they got the official rate. I do use CapitalOne for my overseas purchases, and I will continue to because they don't add on anything, in fees or by using a poor rate. My $700+ charges last spring came to less than $1 more than the rates listed on either Oanda or XE; some CapitalOne $ amounts were a few cents higher, and some were a little lower.

I would prefer to post this out on the Europe board, but they have split it into these three boards instead.

 

I called Capital One and verified with their customer service today that they do NOT charge the usual 3% fee for international purchases.

 

I read on another thread that most credit cards do, and checked my BofA Visa online, because I had charged some UK National Express bus tickets online. Sure enough, there was a separate charge for 3%.

 

So, I applied for a Capital One credit card today onine. Took about 30 seconds. It takes 2 - 3 weeks to get the cards, so if you're going to Europe within the month you might want to do this now.

 

We will be charging pre and post cruise hotels and food, car fuel, rental car, etc. and I'm not happy about paying an extra 3% in ENGLAND!!! Already expensive enough as it is.

Hey, Peg!

You are correct and I forgot this fact before my last trip to Spain. I always use my Cap 1 card for travel and eating because then I get 2 miles per dollar, and my BofA Visa for everything else. When we got back I had that foreign exchange card on all of my BofA charges and not one on the Cap 1.

jc

Hi Pcur, I think maybe you are missing my point, which is that I am certain Capital One does not tack on an itemized service charge, that's been verified enough times. However, if their "conversion rate of the day" as you call it is a worse "conversion rate of the day" than other credit cards use, it may not matter. There are multitudinous conversion rates in use at any given time. If you buy currency at an exchange bureau, for example, you get a certain conversion rate. If you immediately wanted to sell that currency back to the exchange bureau, you get a different conversion rate. Capital One's conversion rate may not be the same conversion rate as Bank A's which may not be the same as Bank B's and so forth. It has nothing to do with the merchant.

 

This is why I honestly feel that the only way to get a handle on the situation is if someone charges the same identical item in the same store on the same day using a Capital One card for one purchase and some other charge card for the other purchase - the same experiment I ran using two different ATM cards, one of which has a service fee, and one of which does not. The amounts withdrawn from my checking account were identical, because the credit union ATM used one exchange rate, and the bank used a BETTER exchange rate but added a service charge, making the out of pocket amounts identical.

 

To look at it another way, for sake of argument, if you buy something for $105 in a state that incorporates its sales tax directly onto the tagged price or something for $100 in a state with 5% sales tax separately itemized on your cash register receipt, the cash in your wallet is reduced by the same amount. :D

 

I'm probably muddying the waters with my examples - but I honestly don't feel that Capital One could possibly be, out of the goodness of its corporate heart, forfeiting an opportunity to earn fees on foreign purchases by its customers. It's getting the money somewhere. I guess if no one volunteers I'll have to get a card myself and run my experiment!

OK, having recently traveled to Spain in the EU for 3 weeks, from middle December to middle january. On January 4th for example I charged internet in my hotel with my Bank of America Visa. The bill was for 17.40euros... my credit card was for $22.96usd there was also a charge for $0.68 for foreign exchange charge. This is an effective exchange rate of 1.359. On that same day we ate lunch at a bar and the bill was for 43.00 euros the charge on my Capital one Miles card was $56.33 with no additional fees. That is an effective exchange rate of 1.310. Therefore your theory while intriguing enough for me to see what that real answer was is wrong. As an economist these things fascinate me, so I think to my satisfaction this is resolved in Capital one's favor, as a competitive advantage.

jc

This is a great topic near and dear to the heart (or is it wallet). My wife and I travel frequently (usually international) and always make liberal use of our ATM cards (we havent cashed a Travelers check in more than 10 years) and plastic. We carry two different Visas, 2 different MCs, 2 different ATMs (different banks) and an AMEX. Some charge fees (2 or 3%) and some don't. We have used them all over the years and I will sometimes calculate the actual exchange rate (including fees) when I get my statements. The bottom line is that there is very little difference between the cards although one of our Chase MCs does seem to get a slightly better rate (we are talking less than 1% difference). The ATMs are always good and beat the best rates you can get exchanging cash. As to Travelers Checks, they are becoming nearly useless overseas except for emergencies. Cruise ships will exchange them for dollars with no fees, and this is the best deal. Money changers and banks actually charge more to exchange travelers checks than cash, and many banks do not even want to exhange them at all! You will often need good identification to exchange travelers checks often including your passport (usually a copy of the main page will be sufficient).

Hank

OK, having recently traveled to Spain in the EU for 3 weeks, from middle December to middle january. On January 4th for example I charged internet in my hotel with my Bank of America Visa. The bill was for 17.40euros... my credit card was for $22.96usd there was also a charge for $0.68 for foreign exchange charge. This is an effective exchange rate of 1.359. On that same day we ate lunch at a bar and the bill was for 43.00 euros the charge on my Capital one Miles card was $56.33 with no additional fees. That is an effective exchange rate of 1.310. Therefore your theory while intriguing enough for me to see what that real answer was is wrong. As an economist these things fascinate me, so I think to my satisfaction this is resolved in Capital one's favor, as a competitive advantage.

 

jc

It is interesting that Bank of America also has a more expensive exchange rate. $22.96 for €17.40 gives a rate of $1.3195/€, nearly a penny more per euro than Capital One. In fairness, January 4, 2007 was when the dollar started an all too short rally against the euro. Prices from Oanda for a few dates:

01/03/2007 1.32530

01/04/2007 1.32480

01/05/2007 1.31370

01/06/2007 1.30640

I wonder if the credit card companies did the exchange on January 5 or 6, or if Oanda's interbank rate is inflated. Either way, I have a reminder to myself to get a Capital One card. I would have stayed with my Citi credit card if they had not raised their fee from 1% to 3%.

Whogo, you are welcome. It was easy to do since, I do all of my banking online, so, when I saw the topic, I had to give the one questioning whether Cap 1 actually offered a better deal or if they were all the same, just one hid the fee while the other made it apparent credit for a good bit of cynical thinking.(Something I admire) I was only too happy to know the answer instead of just believing the advertising and the hype in Conde Nast or other travel sources. There was one case where I bought something at Corte Ingles in Valencia on the BofA card and my wife used the capital one for a purchase, the situation was exactly the same as the the example I just showed.

We all take so much on faith, it is good to actually know something for a change. I like knowing.:D

jc