In my post about the Best ATM or Credit Card For Foreign Travel?, Capital One was a promising option as it had no issuer-based foreign currency surcharges, unlike the 3% charged by Citibank or Chase.
However, it was not entirely clear if they waived the 1% fee charged by Visa/Mastercard. After my trip to China, I am happy to report that the 1% Visa/MC fee was indeed waived, at least for me. I came to this conclusion after using historical exchange rates courtesy of Oanda.com.
Here are some examples for Chinese Yuan on June 6, 2006:
Capital One USD to CNY exchange rate: 7.997 to 1
Interbank Rate USD to CNY rate: 8.01 to 1
And another example for Hong Kong Dollar on June 12, 2006:
Capital One USD to HKD exchange rate: 7.762 to 1
Interbank Rate USD to HKD rate: 7.76 to 1
They were essentially the same, varying less than 0.2% (and sometimes even in my favor!). As you might have guessed, the interbank rate is the rate that banks charge each other and is usually the best rate available. Retail exchange rates are usually more expensive either way by a certain margin. If there was a 1% fee, the exchange rate for CNY would have been about 7.93 to 1 or so, giving me less yuan for a dollar.
This may have been for my specific Capital One card, but I don’t think so. I have a GoGash card that gives me 1% flat cashback, so in addition to avoiding conversion surcharges I even got 1% net back on my purchases. Thus, even though Capital One is weird in reporting their credit limits, I’m still keeping this one around for international travel.