FX transaction fees on credit card

S

stanman

Registered User
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Hi

I've had a Tesco credit card for a number of years and regularly use it for non-euro (GBP and USD) purchases, both online and when travelling.

In Nov, a new 1.75% "foreign exchange fee" started appearing against each of these transactions. When I queried with customer service, they referred me to the T&Cs (which do indeed mention this charge) and suggested it was an error that I had not had this fee charged previously.

I thought CC companies made enough margin on a slice of the transaction cost plus the use of a favourable FX rate, so am surpised by the need for an additional fee.

Is this FX fee standard for all credit card services in Ireland? Are there any providers that don't charge this fee? Any other work-arounds (e.g. I notice PayPal doesn't charge it)?

I've always declined the offer from Amazon to charge in my home currency, but may need to look at this again.

Thanks for your help
Stan
 
The 1.75% fx fee was always charged.

It is now being separated out on the bill.

It was previously simply included in the euro cost.

This 1.75% is the normal fee that was always charged. There isn't a new fee.
 
stanman said:
suggested it was an error that I had not had this fee charged previously
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When I had a Tesco credit card, I was never charged the 1.75% fee nor was the fee included in the amount that was FX'ed (I checked a few times). I suspect that the agent is right, the fee was simply not been charged.

RedOnion said:
PayPal or Revolut are you best options to avoid.
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Agreed on Revolut.

Do Paypal not charge a margin?
 
CiaranT said:
Do Paypal not charge a margin?
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You are indeed correct! I'd never noticed it before. It's hefty enough too - 2.5%. that works out more than most credit cards! I'll be avoiding that in future!

"
PayPal currency conversion fee
Fees for converting your balance or payments that you receive into another currency: 2.5% above the wholesale exchange rate"
 
I use a Revolut card and have done for years. It is essentially a debit card, but they charge the interbank rate (apparently) and have no FX charges. My PTSB CC has these infuriating charges, for which I see no justification. Revolut also allows up to 200 euro withdrawals from ATM's without charges per month without add'l charges, and then 2% ( a wee bit steep imo) after that. But if u use the card in lieu of cash outside the Eurozone, no add'l charges AFAIK.
 
Stanman, I also have a Tesco credit card and was never charged this 1.75% fee until the November statement. I have stopped using it for foreign transactions now and have moved to a Revolut card.
 
CiaranT said:
When I had a Tesco credit card, I was never charged the 1.75% fee nor was the fee included in the amount that was FX'ed (I checked a few times). I suspect that the agent is right, the fee was simply not been charged.
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I have had a Tesco CC for years.

There has always been an fx charge.

All banks have FX charges on non-euro CC transactions, typically 1.75% - 2.65%.

It is in the terms and conditions.

It just wasn't listed out on a separate line on the statement.
 
PurplePudding said:
Stanman, I also have a Tesco credit card and was never charged this 1.75% fee until the November statement. I have stopped using it for foreign transactions now and have moved to a Revolut card.
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You were always charged 1.75%, it was included in the cost.

Tesco aren't a charity, of course there was always a 1.75% fee.
 
Thanks everyone. Will definitely be looking at Revolut.

@PurplePudding - interesting you've seen the same timing on these charges as I have.

@Protocol - the customer service agent also asserted initially that it was always charged but not broken out as a separate line item. However, when we checked back through previous transactions before Nov, he agreed this was not the case.
 
I'll pull out old bills if I get time, and use the Visa website to get old wholesale exchange rates, to check my figures.
 
Protocol said:
I'll pull out old bills if I get time, and use the Visa website to get old wholesale exchange rates, to check my figures.
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Yes I did that, and the 1.75% was included in past exchange rates, i.e. the rate was 1.75% above xe.com historical exchange rates.
When I first saw the transaction charge listed I thought Tesco had upped their fees, but they are just spelling out the details.
 
Brendan Burgess said:
Are you suggesting that the costs to Visa are the same for processing a transaction in euro as in US $?

I would have thought that they would be more.

Brendan
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Given the entire system is computerized, and Visa gets their 'cut' via a steep FX charge, I see no reason justifying add'l FX transaction charges. In any event, people are voting with their feet, like me, and taking my business elsewhere. I can get a reasonable FX service abroad using Revolut, so I don't bother using my € Visa outside the Eurozone.
 
Another suggestion would be to open a USD and GBP account with Lloyds in Isle of Man. You will have fees in putting in the initial deposit, but thereafter there would be no FX fees. You would need to balance this though with the annual/monthly account management fee. If you are a regular user in these currencies it might be worthwhile.
 
As it happens, I have a STG account, and deposit money in STG by bank transfer into Revolut for no add'l charge. I have a Revolut 'app' on my phone giving me my balance immediately, all transactions appear instantly, I can even use 'tap'. When I was in South Africa I used it extensively, with no add'l charges. There is a premium version, but TBH, the ordinary one works fine. I tend to avoid the ATM fees by using tap or as a debit card. I don't generally use cash of I can avoid it. Jeepers I sound like the Queen....
 
Protocol said:
You were always charged 1.75%, it was included in the cost.

Tesco aren't a charity, of course there was always a 1.75% fee.
Click to expand...

I've pulled out my bill from December which is when I first started noticing the fees. Transactions before 30th November show as follows:

17/11/17 - 44.58 GBP Exchange Rate 0.890 - Amount EUR 50.10
24/11/17 - 20.00 GBP Exchange Rate 0.889 - Amount EUR 22.49

Then after 30th November, there's an extra line following each foreign transaction:

30/11/17 - 3.06 GBP Exchange Rate 0.879 - Amount EUR 3.48
1.75% Foreign Exchange Fee on this transaction - EUR 0.06

04/12/17 - 35.58 GBP Exchange Rate 0.887 - Amount EUR 40.12
1.75% Foreign Exchange Fee on this transaction - EUR 0.70

The exchange rates before this charge was shown don't seem to include any fee?
 
@PurplePudding - thanks for checking old statements.

@Protocol - thanks for link to the visa fx rates.

I also pulled my old statements and found the following:

Aug & Sept - 1.75% fee included in fx rate, no broken out fee.
Oct - didn't have any non-euro transactions.
Nov - 1.75% fee not included in fx rate, no broken out fee.
Dec & Jan - 1.75% not included in fx rate, broken out fee of 1.75%.

So this could explain why @PurplePudding didn't see the fee in the fx rate in Nov and @Garvan has seen it in previous statements.

The removal from the quoted fx rate and the introduction of the broken out fee didn't happen at the same time and this has caused some confusion.
 
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