Comment by tialaramex
16 days ago
Even if the FX is notionally "free" they pick the rates. So they can set those rates to generate exactly the same profit for them as with fees.
You will probably not see rates that are even competitive with a dodgy FX cash place at an airport, let alone with the numbers you've seen on financial networks for what FX transactions by banks cost, but you feel happy because there was "no fee".
>they pick the rates. So they can set those rates to generate exactly the same profit for them as with fees.
No, the rate is set by the card network, eg https://usa.visa.com/support/consumer/travel-support/exchang...
That link doesn't support your claim:
>> Your bank may or may not use the rate indicated by this calculator to bill you
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(As a side note: the fine print follows up with this:
>> If your transaction is converted by the merchant or ATM operator, the exchange rate indicated by this calculator will not apply.
Don't ever let a merchant or ATM do foreign currency conversion for you. They charge astronomically high fees without exception. Pay in the foreign currency and let your card do the conversion.)
Huh. I wonder how long that's been true. I guess I haven't been to America since last century, but I could have sworn I had zero fee but unreasonable FX rates when I was in Poland which can't have been more than 25 years ago.
The issuer can opt out of the card network Forex and do it themselves. That's how Revolut and Wise work.
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> You will probably not see rates that are even competitive with a dodgy FX cash place at an airport
You're crazy.
I have a Capital One account because they advertised "no foreign transaction fees". I checked on my foreign-currency payments and was always charged an amount that looked eerily similar to "1% more than you would have paid at the published exchange rate", so it's not clear to me why they say "no fee" and not "1% fee".
But the 1% fee that they actually have is very reasonable. An airport stall is in an entirely different league.
This is flat out incorrect. It's actually quite difficult to get a cash FX rate that's even close to as good as the standard credit card FX rate, which is also set by Visa/MC and not the banks.
Where the banks do get their pound of flesh, though, is the foreign transaction surcharge, which is often around 3%. No-fee cards exist but you need to look for them. And a whole new set of charges applies to doing a foreign cash advance on a credit card.