I was recently offered a wonderful Air France - American Express credit card. So, I asked them whether it was good for people doing a lot of foreign travel. In other words, what additional charges are there for paying in a foreign currency? The answer - we charge the same 2% fee charged by other credit card companies.
So, I asked myself whether there is some sort of obligation for credit card companies to charge 2% on foreign transactions. There's an interesting site that compares the features of 234 different credit cards that are available in the UK. If you click on "Advanced Search", you can activate the "International Charges" feature. You can then sort using the International Charges field, which reveals that of the 234 cards on offer, most will charge you a 2.99% FTT for multiplying the foreign currency value by the current exchange rate, 33 will charge you 2.95%, 1 charges 2.5% and 2 will charge you 2%. In other words, UK banks are even worse than those in France. But, amazingly, there are 7 of the 234 cards that don't charge anything at all for paying in a foreign currency!
Here they are:
- Saga Platinium Credit Card
- Halifax Rewards Clarity Credit Card
- Halifax Clarity Credit Card
- Post Office Platinium Credit Card
- Post Office Classic Credit Card
- Sainsbury's Gold Credit Card
- Metro Bank Personal Credit Card
But there is no doubt about it. Banks are under absolutely no obligation to rip their customers off with charges of up to 2.99% just for doing a single multiplication.
This was confirmed by a colleague from the USA who showed me his JP Morgan Chase card (solid metal) that also charges no FTT at all on foreign currency payments.
Conclusion? We should campaign to force banks to drop these outrageous and totally unjustified FTTs. And if they don't, governments should not hesitate to apply the same 2-3% FTT rate to all the $4 trillion a day that the financial sector currently does for free. With 250 trading days a year, we can assume that foreign exchange transactions are currently around 1000 trillion dollars a year. 2% of than would be 20 trillion dollars - enough to solve the national debt problems of all the worlds governments in a couple of years.
There can surely be no justification for charging users 2.99% for a service that banks do for free. Until this aberration is eliminated, there can be no arguing that we are in this together.