Credit card charges gone wild: “international transaction fee” added to Puerto Rico purchase

Now it’s gone too far.

When Leticia Lopez returned to Albuquerque from her trip to Puerto Rico, she found an “international transaction fee” added to every purchase on her credit card bill.

See the problem?

Puerto Rico isn’t an international destination. It’s an unincorporated, organized territory of the US with commonwealth status — meaning you pay in dollars and don’t have to show a passport before being let on the island.

Lopez is furious.

I have paid such fees in the past when I have used my Visa card in many countries I have visited and understand that it is warranted in those cases because there are different currencies that have to be converted.

However, in Puerto Rico, there is no other currency but the U.S. dollar. I contacted State Farm Bank and pointed this out to them, as well as the fact that I did not have to use a passport to travel to Puerto Rico nor go through international flight immigration and customs there or on the return.

They insisted that Puerto Rico is international travel, and would not remove the $16 fees in international transaction fees.

Adding an “international transaction fee” to Lopez’ bill is nothing more than a money grab by her credit card company. I suggested that she appeal this decision, which she’s in the process of doing.

This is just the latest in a series of abuses by credit card companies in the wake of credit card reforms that will take affect later this year. I’ve mentioned international transaction fees in several previous posts, including this one. The Center for Responsible Lending also has a thorough report on the issue.

How does this affect you? Now more than ever, it’s important to review your credit card bill often, particularly when you’re traveling. (My credit card company just changed its terms and conditions, and odds are yours has, or will.) These revisions are designed to extract more money from you. And travelers are an easy target.

Dispute any funny fees immediately. If your credit card company insists on boneheaded charges like an “international transaction fee” for purchases in Puerto Rico, dump the card and find a better one.

Update (Jan. 11): Lopez’ bank has responded.

As stated in your Credit Card Agreement and Disclosure Statement, if you use your card to make an international transaction, we will assess a FINANCE CHARGE equal to 1.0% of the U.S. dollar amount of the transaction. An international transaction is defined as any transaction that was acquired in any country other than the United States. Puerto Rico is still considered a Latin America country as it pertains to currency conversion–thus the fee is charged. Visa charges State Farm Bank Visa, along with ALL other issuers for cross border transactions thus being the reason for the charges which were placed on your account.

As a courtesy, I have waived the amount of $16.81 total International Transaction Fees from your account. I do need to strongly caution you that if you use your State Farm Bank Visa card in Puerto Rico that there will be International Transaction Fees and we will not be able to remove from your account.

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  • Bill

    Can the attorney general of Puerto Rico file suit ?
    Will some one from a San Juan newspaper pick up this story ?

    Could they get the U.S. State Department to file an amicus brief ?

    Maybe a number of US Territories – PR, VI, Guam, American Samoa – could lobby the Comptroller of Currency to issue a statement.

    These aren’t obscure places like Howland island…

  • Carl

    I think her own AG can file suit. No need to go as far as getting Puerto Rico’s officials involved, although they certainly could consider doing so.

  • Deborah

    I had this happen to me with Citibank. I called to have the charge removed and even though I escalated to a manager, they refused. It was $4 but because they refused to honor a long-term client’s request, for a charge that was not fair, made me switch credit cards. The Citibank manager even lied to me, saying that all card charge foreign transaction fees, which is simply not true.

  • http://www.angrymarks.com/ Kevin Fields

    “Puerto Rico is still considered a Latin America country as it pertains to currency conversion–thus the fee is charged.”

    Except it is owned by the United States and the currency is the American dollar. There is no “local” version of the dollar and there is no conversion. State Farm is completely in the wrong here, and I think a thorough investigation by either New Mexico’s state attorney general office or the department that handles banking regulation is warranted.

  • p.through

    “Puerto Rico is still considered a Latin America country as it pertains to currency conversion–thus the fee is charged. ~ The Bank”

    Um, no it’s not. Because there is no currency conversion. Morons.

  • http://gguttadauro@hotmail.com Gaetano Gittadauro

    Sounds like Sarah Palin runs Citibank, “I can see Russia from my house.” & thus I she knows foreign policy. Just more scamming. I hate corporate America and the greedy TARP grabbing bastards like CITI. Use Capitol One, they charge no foreign transaction fee when used in ANY country, and have resolved issues very well when a foreign merchant adds in their bank’s fee (usually 5%) which is lot when I bought a $1000 USD South Aftican tour. Plus Capitol One returns 1% on all puchases, and 2% on grocercies. In short a great card to have..

  • Nobody

    Soooo. Puerto Rico and/or the U.S. Virgin Islands: Which requires a U.S. passport to enter a United States territory? On which can you buy duty-free? Which has the better duty-free allowance and why? I buy a U.S. postal stamp with American currency and mail a “registration for the military draft” post card to the mainland in U.S. mailbox outside a U.S. post office, but I can’t vote for the POTUS nor VPOTUS on these territories.
    Can the incarcerated extremists at Guantanamo be moved to Navassa Island? Can I buy Cuban cigars there without extra charges on my Visa card?
    Nobody was faster

  • Brian

    “Puerto Rico is still considered a Latin America country as it pertains to currency conversion–thus the fee is charged.”

    Since when was Puerto Rico a country. Puerto Rico is still part of the United States though not a U.S. state, yet. All credit cards that say that Puerto Rico is a foreign destination should be ashamed of themselves for failing geography. There is no other currency conversion in Puerto Rico. A U.S. Dollar in Puerto Rico is a U.S. Dollar in the States-period; end of story. I sometimes wish that someone could bring the news of this over to a major media outlet.

  • Chris

    Panama also uses the US dollar, but is obviously a different country. However, despite the lack of a currency conversion, I was hit is a 3% fee when I used my Visa there.

  • http://www.thereheis.com SLEZE

    “Puerto Rico is still considered a Latin America country as it pertains to currency conversion–thus the fee is charged.”

    Considered by whom? Not any government entity.
    Currency conversion? I am pretty sure that during her trip the conversion rate was 1USD = 1USD. Although these rates change from day to day.

  • Diana G.

    Puerto Rico is still considered a Latin America country as it pertains to currency conversion–thus the fee is charged
    The statement is FALSE, it does not pertain any currency conversion; thus her assumption is WRONG.

  • Randy B

    Like a good neighbor?! Doesn’t look like it.

  • http://www.kellanrobertevans.blogspot.com Nicola

    I stumbled upon this thread while trying to find out if my credit cards are going to charge me the ubiquitous “international transaction fee” when I travel to Guam next month. I still don’t have a definite answer, nor would I trust the credit card rep over the phone (they’re great at take backs!), so I’ll stick to my usual Charles Schwab Visa that I use for travel. We use this when we’re in Europe to visit my husband’s family because not only is there no foreign currency fee, but they actually give you going rate of exchange for the day, rather than the banker’s rate of exchange that you’ll get with Capitol One.

    My foreign transaction fee story was in purchasing a cellular phone from a company in New York. Which shipped to me from New York. But apparently the company’s “headquarter” are in London. And so although I paid for the phone in US dollars from a company in New York which shipped me said phone from New York — I paid a 3% “foreign currency transaction fee”. The credit card company refused to refund it, citing the fact that the company’s headquarters are in fact in London. Bollocks!

  • Alan W

    Are there any lawyers out there who would like to file a class action lawsuit on behalf of all credit card holders who have been charged a currency conversion fee for territies that use the U.S.dollar?

    It seems to me that this would even constitute fraud since the credit card companies are misrepresenting the transactions and are charging for a service that is not rendered and does not exist.

  • Faith

    I too was charged a 3% “foreign purchase transaction fee” for using my Mastercard in Panama when there is no currency conversion. I’m sure there was no such fee (and I used Mastercard then too) when I was there in 2002, 2003, 2004 & 2005. I think this is fraudulent when Panama uses the US dollar as their currency.

  • bo

    I have been charged a 3% foreign transaction fee for a airline ticket that I bought here in the USA. I have called the airline, British Airways, who does not understand why this should be a foreign transaction as it was purchased via their US site in USD etc. Bank of America claims that it was processed outside of the USA which British Airway denies. I should also state that I do live in Texas and that this was a US issued card to my home address in Texas.

    It seems that this is a consumer trap where you could be using your card domestically only to be charged a 3% foreign transaction charges cause it was processed abroad?? How would a consumer know of such charges prior to making the transaction??

    This was a business class ticket to London costing some 8000USD so the 3% charge is 240USD.

    Incidentally I used the card for other transactions whilst in London and I am NOT disputing those charges as they are foreign and I was aware of the foreign transaction fees for that kind of card usage.

    A frustrated traveler and former Bank of America card holder

  • BCweb

    I spent over a 1/2 hour on the phone w/ the BARCLAY VISA card people.
    They charged me $27.62 in a FOREIGN TRANSACTION FEE for a business order I placed with a company who operates out of Canada and the USA. B/c the billing states “Vancouver BC”, I was told I cannot have the fee removed, waived, reduced. I am furious. They don’t care if I stop using the card all together. I repeated “I need this fee waived”. I had no idea I would be charged such a ridiculous greedy fee on this purchase. The gave me the whole “Credit Card Agreement” song and dance. This is wrong. The company I did business with is trying to help me, but even so. One of us will eat the 27.62 because BARCLAY Cards VISA with Itunes rewards refuses to budge on giving me a one time break on this fee. One nation under corporation. (Unless it’s Vancouver BC, then it’s Foreign)

  • chi

    I have a Citibank Mastercard and just came back from a trip to Puerto Rico. Before I left mainland US, I called Citi to see if there would be a foreign transaction fee if I used my credit card in Puerto Rico, and they said yes there certainly would be. So I went to Puerto Rico fully expecting to get hit with a 3% fee everytime I used my card (but how can you not use your card when paying $500 hotel bills…who carries around that much cash?).

    However, I just got my Citi statement, and there are no foreign transaction fees. Maybe Citi has changed their policy after retaking Geography 101.

  • mar omaralene

    i just noticed bank of america is charging me international fees i live in tn and only u my card in tn how can they do this>

  • marlene omara

    how can banks charge u international fees if u only use your card in the usa?

  • http://www.globalcollect.com international credit card

    What a nice post this has been……..great post………
    I like this post …….I have a Citibank Mastercard and just came back from a journey to Puerto Rico. Before I left mainland US, I called Citi to see if there would be a distant transaction fee if I second-hand my credit card in Puerto Rico, and they said yes there positively would be………
    Thanks…….

  • Melissa

    If you have recently purchased airline tickets for an international flight with your credit card, you may have been charged a “foreign transaction fee.” Contact Jerome Noll via email at jnoll@mdpcelaw.com or Melissa Wu via telephone at (914) 517-5076 for free legal assistance in recouping your losses.

  • Lord Soth

    There is an interchange fee of 0.7 ot 1.0% charge by MC, Visa international on same currency foriegn transaction fees, to the credit card companies.

    But as a merchant we are charged this fee, when this situtation occurs, and it is added as surcharge to our discount rate we pay on all credit card transactions.

    Now the banks are charging the customer, up to three times the real fee, which the merchant that excepts your credit card has already paid.

    What add injury, is some banks are listing the extra charge under the our company name on the credit card statement, so the customer calls thinking we ripped them off instead of the bank.

    As a Canadian, we hate our banks, but they are angels compared to what the US banks try to do.

    If the US banks would stop lending money to people with bad credit, maybe they wouldn’t need to recoup there losses from responsible consumers.

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