Capital One: Great For International Travel

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.

Comments

  1. There is no foreign transaction fee for all capital one cards, I am glad you reported this one on your blog. Its the best card to use internationally. I got the new No Hassle Cash rewards which also has 2% on gas and grocery and 1% cashback on all other purchases.

  2. I problem people on fatwallet have started to recieve notices that as of Nov 1, 2006 Cap1 wont be absorbing the 1% fee charged by Visa/MC any longer. But atleast they not adding anything above the fee charged by Visa/MC like Citi, Chase, MBNA and others do.

  3. Few questions:

    So does that mean that before if international transactions were made using the CapOne card before Nov 1 2006, the 1% Visa/MC fee will still be absorbed?

    Also, I used to think that the 1% Visa/MC fee is reported as a separate item, so that users are aware of the extra charges; at least that’s what happens for my credit union Visa card. Is this applicable to other cards like Citibank, Chase, etc.

    Is there any card that still absorbs the 1% Visa/MC fee? Seems like it’s hard to find…

  4. Sorry, just one extra question:

    Is it possible to avoid the 3% fee by using a prepaid Citibank MC card?

  5. OT: Jonathan – something’s up with your RSS feed, it has not worked for over a day and clicking the link to your feedburner page gives a 404.

  6. Amex, Citibank, Chase, Diners Club and MBNA for sure put it on a seperate line but the line item charge also includes any charge they add above that fee. So for example Citibank will list a 3% converision fee 1% is Visa/MC fee and 2% is there fee. They dont split it up into 2 charges.

    So all charges prior to Nov 1 wont be subject to the 1% fee. If you goto Flyertalk.com and read the thread this new change seems to be affecting only some card memebers or just not everyone has gotten the notice yet no one is sure tho. So far it seems to be affecting only No hassle Rewards card as people who have just plain No Hassle card have yet to recieve notice. Again this just an educated guess maybe they just have not gotten there notice who knows for sure.

  7. Thanks for the heads up Jaro on the RSS feed – I have no idea what happened, but I think it’s fixed now.

  8. Also the Merill Lynch Plus card does the same.

  9. Yep – it’s working ok again. Thx!

  10. Not the best in my eyes

    Penfed gives you 1.25% return and doesn’t charge you for international use. After visa/Master card’s 1% that leaves you with about .25% earnings. Seems better to me than capital one’s

    Anybody can join Penfed also at penfed.org

  11. My MBNA Charles Schwab card also absorbs the 1% Visa fee. I applied for the card in March- they may have started adding a fee to new cardholders.

    I much prefer this card to anything from Capital One. Besides accurate reporting, MBNA only pulls 1 credit bureau at application. The customer service has also been great. It’s a flat 1% cashback card with no limit and cashout values as low as $25. Not the best rewards, but it’s definitely one of my favorite cards.

  12. I don’t know if MBNA will keep thier policies the same since BoA has taken over. I got letters in the mail informing me of changes to my MBNA credit cards, terms, payments, fees etc… I guess time will tell. One good thing, at least for me is that they say by the end of the year you can make payments for MBNA credit card at BoA.

  13. Two other cards that charge only 1% total on international charges are the Target Visa card and the State Farm Bank Visa card. Both of these itemize the charges, too.

    The State Farm Bank Visa also gives 1% cash back, so after rewards redemption, it nets out nicely.

  14. Yes. they seem to waive the fee. I used my in the UK and in Switzerland and the charges in $s were exactly what the conversion rate was applicable on that day. Plus I did get the standard 1% cash back. Interestingly in most Swiss hotels they would ask me if this was an ‘american card’ in which case they would directly settle the bill in dollars.

  15. syder brings up an interesting scenario, too.. when a store/hotel/restaurant does the conversion into US dollars, they might not be doing it at a rate that’s as good as the one your credit card would have used.

  16. Do you know if Chase really does charge the 3% fee? I got hit with Citibanks as a seperate charge – not sure if some banks roll it into the exchange rate or what..

  17. Chase folds the fee into a single lumped charge on the transaction list on the website, but calls it out as a line-item on their paper statement. They don’t further divide it between the Visa fee and the BS charge-you-for-nothing additional fee imposed by Chase.

  18. my capital one account was frozen in the july time frame. i”ve tried 3 times to get on line but can’t. I’ve talked two of their people but could not understand their english. I hope they do not expect a renewal of this account. God bless America and companies who do business within our borders.

  19. The GoCash card gives you 1% net earnings – 0% surcharge + 1% cashback rewards.

  20. So how has your overall experience with Capital One been Jonathan?

    They are obviously well known for their sub-prime lending… and then there is all that controversy over their policy to not report card holders’ credit limits, which obviously can REALLY mess up your credit score (depending on your situation and debt utilization ratio). Supposedly that policy is changing by the end of 2007, but I’m still very worried about getting a visa card from them (for future travel purposes) because everywhere I turn I see posts about their practice of setting ultra low credit limits and offering customers extra cards instead of increasing the limit.

    What kind of limit did they start you out with? (and what was your approximate credit score at the time?)

  21. CapOne rep told me no foreign trans fee, but will convert the foreign currency at whatever the local bank charges, which generally is slightly higher than international rates that banks normally charge each other.

    In response to the last post, I have a credit score slightly higher than 750 and they gave me a limit of $10,000, which I thought was good. But a part of me wants Congress to go after these slim balls, but I know Congress will just muttle the whole thing and probably add a terrorist security tax to all transactions! Consumers will win in the end when the citizenry takes back government.

  22. HamBone says:

    I called Cap-One and could not get information about their policy of reporting credit limits to the bureaus, the cust-serve rep. & her supervisor were very poorly informed.

    Question to all w/ Cap-One Visas:

    When you checked your reports, did Cap-One show your credit limit?

  23. Hi, how did you find out the actual Capital One USD to HKD exchange rate: 7.762 to 1?

    I’m going on a trip to HK next week and tried calling their customer support line but they couldn’t tell me the rate. Did you find out after you received your billing statement?

    Thanks for all the useful info.

    GN

  24. Jonathan,
    Do you know of any credit cards today that doesn’t charge the 1% international fee? I have a vacation coming up and I’m looking for the best card to apply for & use
    thanks

  25. justcruzn says:

    I found out some corporate numbers to capital one if anyone wants them. The 1800-955-7070 number will get you no where. “Senior account managers” at that nu,ber will apologize profusely and say that there is no one else who can help you besides them. Of, course, they will offer no help. The corporate office numbers are are 804-284-5xxx. Capital One seems to own most of the exchanges above 284-5200. If you try enough of them, you may actually get someone who will help. Some of their faxes are 804-284-5200, 804-284-5201, 804-284-5203, 804-284-5204, 804-284-5202, and 804-284-5704. god Bless the consumer!

  26. My CapitalOne World Mastercard is charging a 1% currency transaction fee passed by visa/mastercard.

    3 transactions posted Aug 11 (purchases made Aug 9-10).
    274 THB showed up as $8.20 or 33.414634146341463414634146341463
    158 THB showed up as $4.73 or 33.403805496828752642706131078224
    1290 THB showed up as $38.60 or 33.419689119170984455958549222798
    the exchange rate for the day was 33.8 as shown on Visa’s website. That’s 1% visa fee for me.

  27. Paul Arbet says:

    I obtained a Capital One Platinum card for purposes of foreign travel. While in South Africa, I would occasionally also use my AMEX card for certain purchases. What surprised me was for my Capital one purchase on 12/29/08, an exchange rate of 9.3395 RAND/US Dollar was listed. That same day, the exchange rate of 9.4502 RAND/US Dollar was calculated on my Amex statement. (my exchange rate for AMEX include the 2.0% conversion fee – note increasing to 2.7% on Jan 11, 2009). At first I thought that perhaps the exchange rate fluctuated throughout the day and that caused my AMEX with conversion fees to outperform the Capital One. Upon looking closer at the multiple purchases made that same day on my Capital One, although the rate shifted slightly throughout the day, it was not enough to account for the large difference in the two cards. In short, I now question whether there is value behind using the Capital One for foreign purchases.

  28. Capital One claims to not apply any fees to currency conversion when using their credit card for international charges. My experience with Capital One has been that they do not convert the currency using the daily bank rates and that Capital One uses conversions that are at higher rates than the daily bank rate and that is how they can claim they do not charge a currency conversion fee. I have taken international travel in 2008 to a number of countries and used the Capital One credit card only to find out that after I receive my Capital One statement, the currency conversion is significantly higher than that used by several other banks. When trying to resolve my issue/concern with Capital One, they first claimed they used the daily exchange rates from Wall Street Journal. When I have provided the daily currency conversion exchange rates provided by the Wall Street Journal, they then claim to use another source. When requesting their source, they claim their conversion rate is determined from multiple sources and refuse to provide their “multiple sources.” I believe I have lost hundreds of dollars from Capital One as a result of my international charges that actually reflect currency conversion rates that are much higher than the rate provided at other banks. If you plan to use a credit card for international charges, I recommend that you contact Capital One to determine how they determine their source(s) for currency conversion and make sure they document the conversion for you, so that when you receive your credit card statement, it will reflect a verifiable conversion rate. Unfortunately, I suspect Capital One will not be willing to provide you the information to your satisfaction. Good luck.

  29. Capital One DOES charge fees now!

    Warning about Capital One!

    For several years I used my CapOne business Visa card on overseas trips for purchases AND ATM withdrawals. Although there were limits (usually around $400 per transaction, though the limit was never posted, and the machine might not let that larger transaction go through, but wouldn’t explain why; in Moscow we had to call CapOne’s office from our docked ship to confirm we were not charged when no money came out, but only a “Thank you” from the ATM!), and a cash advance fee, which accrues from the posting date, which ranged from 8-12%, there was no foreign transaction fee, whether Turkey, Peru, Thailand, Russia, Ireland, etc.

    I just got back from India and got my PERSONAL CapOne MASTERCARD statement; I had decided earlier this year to open a personal account for vacations, and so used this card for the first time for overseas purchases and ATM cash. Although the purchases had no fees and no finance charges, to my surprise, there was a $10 fee for the first ATM use, and a bit over $11 for the second! And the finance charge accruing for the averaged balance was at 22% APR, with an actual interest for the period of over 50%!

    I called CapOne (yep, got someone from a boiler room in India), and he explained that there WERE fees for ATM use, but not for purchases. I told him this never happened to me before, and read details from my previous statements. When it was explained that this was my BUSINESS account, he said that older one didn’t charge fees, but the new MasterCard personal account did ($10 minimum per transaction, or 3%, whichever was higher), plus the additional finance charge accruing each day, even though I didn’t get my statement for weeks afterwards, and wouldn’t pay online for another two weeks (THAT alone is going to cost me ANOTHER $9, as the balance accrues each day until then!), so he had to calculate the higher amount, or else I’d get ANOTHER finance charge when I paid the posted balance off!

    As someone who NEVER maintains any CC balance, and ALWAYS pays off every cent each month on ALL my cards, this infuriates me. So, next trip, I will have to use my PERSONAL CapOne card ONLY for item purchases, and my BUSINESS CapOne card for ATM use, even though the finance charge accrual is a HIGHER 24%.

    I think I will pre-schedule an online payment for the amount I plan to exchange, so that it’s paid off within a day or two, to minimize the cash advance fee, and then use the internet while traveling to access my account and pay off any further ATM use when it occurs.

    But, of course, if any of this fee stuff was in my agreement, it was surely buried in the finest of fine print and NOBODY ever told me the personal card was different than the business card (unless ALL new cards now have the fee and the old one is just grandfathered to be fee-less).

    If someone else offered a REAL fee-free card that didn’t charge mafia-level usurious interest on cash transactions, I’d like to know about it!

Trackbacks

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