Mon Dieu! Credit card issuers broadening foreign transaction fees

You may find out that your next online order will cost you more than you expect. That's because credit card issuers have added to or expanded their foreign transactions fees to include transactions processed outside the U.S.

Since February, Discover, Citigroup, Simmons and Bank of America expanded their fees, according to Bill Hardekopf of Prior to this change the 3% fee was charged primarily when you traveled and bought something outside the country. With the new rules the foreign transaction fee now includes all transactions made or processed outside of the United States.

The big problem with this fee is that you won't know you're being charged the fee until the transaction shows up on your credit card bill. So what should watch out for when buying something online:

  • If the online merchant is based in another country, you could end up paying 3% more. Check carefully to be sure you're being billed in the U.S.
  • If you purchase airline tickets or a hotel room with a foreign based company, you could end up being charged an extra 3%.

"If you purchase a high priced item, that additional fee can be quite a surprise," Hardekopf told me in an e-mail interview. "Before you order anything from a merchant that is not based in the United States, it is a good idea to call your issuer and ask about this fee. You can save yourself a little money by using a credit card that doesn't charge a fee for foreign transactions. CapitalOne is one of the few cards that still does not charge a foreign transaction fee."

While credit cards are convenient to use when traveling outside they country, they are costly. "Every transaction that you put on your credit card while in another country could be charged an extra 3%, including lunch, T-shirts, books, artwork and souvenirs. It is a good idea to keep this charge in mind to know the true price of the item you are buying," Hardekopf added.

Lita Epstein has written more than 25 books including "The Complete Idiot's Guide to Improving Your Credit Score."
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