Comment by dkjaudyeqooe
2 years ago
A fun fact is that most US reward cards with up to 5% rewards work fine in the EU.
I have noticed some strange behavior with some cards at certain supermarkets. That may be them trying to fight back against the US interchange fees, but there are workarounds.
Reading the description of the interchange fee cap, it sounds like the cap should apply also for US-issued cards used in the EU [0]:
> ... the capping of interchange fees should result in lower fees charged by banks to retailers for processing card payments.
If users of US cards still get 5% rewards when using their cards in the EU, I'm curious about who pays for the 4.7% shortfall.
[0] https://ec.europa.eu/commission/presscorner/detail/en/MEMO_1...
It’s uncommon enough that the credit card processors just eat the fee difference. Probably the issuing bank and not VISA/MC.
The number of people who can effectively use/abuse this consistently is probably pretty low.
> abuse
Yes using the card as designed and promoted I don't know how I live with myself.
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The card issuer and potentially the consumer via atrocious fees and a terrible exchange rate? I have a French-based American Express and their exchange rate + commission on any foreign currency transaction is flat out absurd (I'm talking like 50 euros commission on a 1k USD transaction, + a very bad course resulting in a total ~100+ euro difference than if I pay with a Revolut/N26/BoursoBank no-fee foreign currency payment card).
I only use cards without FX or other fees. The amount is charged to the US card in Euros and Visa or Mastercard take a 50 basis point commission on the currency conversion, but since their settlement is not real time (end of day in US or something) often this can be a exchange rate win depending on your luck.
Interesting. Europe has stricter regulations that cap interchange. As a result not a lot of rewards cards and less competition in that space. In US no caps, but much more players in the rewards cards space. I've checked recent foreign transactions and it looks like both of popular travel cards make some money on exchange rates, but not as much as in France.
Amex Plat did not charge foreign fee, but exchange rate is 1% less favorable according xe.com
Chase Sapphire Reserve also no fees, exchange rate is 0.3% different from xe.com
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Pretty much all Amex cards with an annual fee have no foreign transaction fees as a benefit. The issue is that a lot of small business merchants outside of the US don't accept Amex (or will at least say they don't to avoid the higher interchange fee).
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Cross border interchange & scheme fees are a whole other category.
FX is expensive in general regardless of the way you do it.
Similar but with my debit card from Europe. 0.1% cashback in Europe and UK, 1% everywhere else.