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Credit Card (Rip Off) Commission - Are people aware?

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  • 25-11-2014 2:31pm
    #1
    vicwatson
    Registered Users Posts: 28,403 ✭✭✭✭


    This could either be in Consumer Issues or indeed online buying and auctions.

    A mate and I were just talking an he told me that he queried a bad rate of exchange on his credit card statement with Avantcard.

    He was told that everytime he buys in sterling (as this wa the only currency he referred to) he is charged a 2.65% commission by Avantcard for the privilege and then the actual rate of exchange is created by Visa/Mastercard.

    He told me he was told by the girl that this has been the way for as long the 10 years she worked there.

    So take it you want to buy an item on Amazon.co.uk (and everyone is using credit cards right) for STG 100.00, that price is infact STG 102.65 (which is roughly an extra €4.00 on Stg 100.00 or €40.00 on Stg 1000)

    It might be in the terms and conditions as he was told but to me that's a very very very sneaky charge and most people don't even know they are being charged this (yes you should but who actually reads the T&C?).

    Do all credit card companies charge that commission on STG conversion? or just avantcard I wonder.

    Just something to watch out for when making a decision whether to buy local or in STG from ebay, amazon and the likes


Comments

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    #2
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    That's pretty standard across all credit cards, I'm pretty sure most people know about it too.


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    #3
    Terrlock
    Registered Users Posts: 686 ✭✭✭Terrlock


    Interesting I wonder to debit cards have the same charges?


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    #4
    vicwatson
    Registered Users Posts: 28,403 ✭✭✭✭vicwatson


    Actually it seems like it is for all currencies -

    From their website -

    "For Visa and MasterCard cardholders only, our exchange rates are based on Visa and MasterCard rates on the specific day the transaction is completed. Visa and MasterCard cardholders will also incur a 2.65% foreign currency exchange fee, this charge is included in the exchange rate on the day of the transaction"


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    #5
    vicwatson
    Registered Users Posts: 28,403 ✭✭✭✭vicwatson


    Nino Brown wrote: »
    That's pretty standard across all credit cards, I'm pretty sure most people know about it too.


    I'd be interested to know as it's the first I heard of it and I thought I'd be well up on this stuff to be honest.

    Do you know if all credt card companies charge it, like Tesco etc etc etc?


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    #6
    sconhome
    Registered Users Posts: 5,468 ✭✭✭sconhome


    Pretty sure they all do and likely set their own favourable rate of exchange too.


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    #7
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,832 Mod ✭✭✭✭L1011


    vicwatson wrote: »
    I'd be interested to know as it's the first I heard of it and I thought I'd be well up on this stuff to be honest.

    Do you know if all credt card companies charge it, like Tesco etc etc etc?

    Pretty much. Its gone up significantly on BOI cards of late:

    http://personalbanking.bankofireland.com/fs/doc/wysiwyg/css078549-press-ad-notice-to-customers-v23.pdf

    In Amazon's case, they can charge you in Euro but their rate is usually still worse than letting the bank convert and charge you for the privilege.


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    #8
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    vicwatson wrote: »
    I'd be interested to know as it's the first I heard of it and I thought I'd be well up on this stuff to be honest.

    Do you know if all credt card companies charge it, like Tesco etc etc etc?

    I've never heard of one that doesn't, although I guess its possible there is one


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    #9
    whomitconcerns
    Registered Users Posts: 4,316 ✭✭✭whomitconcerns


    vicwatson wrote: »
    So take it you want to buy an item on Amazon.co.uk (and everyone is using credit cards right) for STG 100.00, that price is infact STG 102.65 (which is roughly an extra €4.00 on Stg 100.00 or €40.00 on Stg 1000)

    So its very common, all credit cards. BUT you are looking at it in the wrong way.

    If you want an item costing £100 it costs £100, not £102.65

    If the exchange rate is 1.2/1 and the commission is 2% (for easiness) it costs you €122.40.

    In a lot of credit card cases the rate you get from Visa/mcard is preferential to the bank day rate anyway. ie £100 might cost you €123 in the bank at a rate of 1.23/1 without commission.

    It looks better as theres no commission but its actually worse by 60c! And you can bet certain that any bank that charges no commission will not have the best rate!

    ie
    Ulster bank today are charging 1.2932 to get your sterling. So your £100 costs €129.32
    Mastercard today will charge you 1.2696. So your £100 costs €126.96. Add in the commission charge and its almost the same overall, certainly not worth arguing over.


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    #10
    Oryx
    Subscribers Posts: 19,425 ✭✭✭✭Oryx


    That charge used to be shown separately on BOI statements, but they stopped doing that a while ago. As mentioned, cc rates are usually better than the websites or a bank will give you anyway.


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    #11
    vicwatson
    Registered Users Posts: 28,403 ✭✭✭✭vicwatson


    whomitconcerns wrote: »
    So its very common, all credit cards. BUT you are looking at it in the wrong way.

    If you want an item costing £100 it costs £100, not £102.65

    If the exchange rate is 1.2/1 and the commission is 2% (for easiness) it costs you €122.40.

    In a lot of credit card cases the rate you get from Visa/mcard is preferential to the bank day rate anyway. ie £100 might cost you €123 in the bank at a rate of 1.23/1 without commission.

    It looks better as theres no commission but its actually worse by 60c! And you can bet certain that any bank that charges no commission will not have the best rate!

    ie
    Ulster bank today are charging 1.2932 to get your sterling. So your £100 costs €129.32
    Mastercard today will charge you 1.2696. So your £100 costs €126.96. Add in the commission charge and its the same overall, certainly not worth arguing over.


    Avantcard are charging 2.65% of the STG purchase price PLUS Visa/Mastercard then set the Rate Of Exchange on top of that (probably a favourable one?).


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    #12
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    vicwatson wrote: »
    Avantcard are charging 2.65% of the STG purchase price PLUS Visa/Mastercard then set the Rate Of Exchange on top of that (probably a favourable one?).

    Every exchange rate is going to be "favorable" for the bank or CC company. Nobody is going to give you the the official rate.


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    #13
    hfallada
    Closed Accounts Posts: 4,180 ✭✭✭hfallada


    An AIB visa debit is usually the official FX market rate plus 1.75%


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    #14
    28064212
    Registered Users Posts: 10,493 ✭✭✭✭28064212


    vicwatson wrote: »
    Avantcard are charging 2.65% of the STG purchase price PLUS Visa/Mastercard then set the Rate Of Exchange on top of that (probably a favourable one?).
    Visa/MC's rates are far better than the banks. Example: An Post have no commission, but have a current sterling buy rate of 0.7679. Visa's rate (with the commission of 2.65%) is 0.7692. So only €0.002 per euro in the difference.

    An Post Currency calculator: http://www.anpost.ie/AnPost/MainContent/Personal+Customers/Money+Matters/Foreign+Exchange/Currency+Calculator+for+Dollars+and+Sterling.htm
    Visa Calculator: http://www.visaeurope.com/making-payments/exchange-rates

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    #15
    whomitconcerns
    Registered Users Posts: 4,316 ✭✭✭whomitconcerns


    vicwatson wrote: »
    Avantcard are charging 2.65% of the STG purchase price PLUS Visa/Mastercard then set the Rate Of Exchange on top of that (probably a favourable one?).

    Ok if we look at it your way..

    Avantcard: £100 +2.65% £102.65*mcard offical rate 1.2696, gives you €130.32
    Ulsterbank £100 in person will charge you €129.32 today

    so an extra euro and you dont have to go into the bank or into a shop. Its hardly a rip off!

    Edit: And according to the other link An post will charge you €130.22 so now its a 10c difference!


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    #16
    lazeedaisy
    Registered Users Posts: 1,328 ✭✭✭lazeedaisy


    My PTSB visa debit has the same charges, but it's shown as an individual charge,then the amazon charge separately,

    It's always been that way


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    #17
    Geuze
    Registered Users Posts: 13,105 ✭✭✭✭Geuze


    vicwatson wrote: »
    This could either be in Consumer Issues or indeed online buying and auctions.

    A mate and I were just talking an he told me that he queried a bad rate of exchange on his credit card statement with Avantcard.

    He was told that everytime he buys in sterling (as this wa the only currency he referred to) he is charged a 2.65% commission by Avantcard for the privilege and then the actual rate of exchange is created by Visa/Mastercard.

    He told me he was told by the girl that this has been the way for as long the 10 years she worked there.

    So take it you want to buy an item on Amazon.co.uk (and everyone is using credit cards right) for STG 100.00, that price is infact STG 102.65 (which is roughly an extra €4.00 on Stg 100.00 or €40.00 on Stg 1000)

    This is very well known, mentioned on every CC bill I receive. It's charged by every bank on most CC.


    It does not work as you describe.


    Example product worth 100 GBP

    Today's market exchange rate is 79.29 pence.

    https://www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html

    Mon 24-Nov = 79.16 pence


    Then Visa/MC add a small margin.

    Their rates are here:

    http://www.visaeurope.com/making-payments/exchange-rates

    On Mon 24-Nov their STG rate was 79.05 pence

    So Visa took a small margin of approx 0.20 pence



    Then on top the bank charge maybe 1.5% - 2.65%, but this commission is usually built into the rate that the bank print on the CC bill.

    The Visa Europe website allows you to enter that fee, to see the new rate.

    Again, Mon 24-Nov, using 2.65%, the rate becomes 77.00 pence.


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    #18
    daheff
    Registered Users Posts: 5,837 ✭✭✭daheff


    hfallada wrote: »
    An AIB visa debit is usually the official FX market rate plus 1.75%


    whats the official FX market rate? I'm not aware of an official FX market???


    the rates people see quoted on websites as "official" are nothing of the sort. There is no official rate. For example I could buy USD at a different rate in a bank in America to a bank in Ireland. Similarily sell EUR at a better price in Ireland than in Bangkok.

    Mostly the rate people see as the FX rate is a guided midpriced rate.

    But thats going off topic, and the OP is implying that Avant card are fleecing him/her by adding another FX margin to the rate Visa/Mastercard are using. This is a BIG source of income for card companies & payments companies.


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    #19
    slimjimmc
    Registered Users Posts: 7,787 ✭✭✭slimjimmc


    Moved to Banking & Insurance & Pensions


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    #20
    coylemj
    Registered Users Posts: 25,351 ✭✭✭✭coylemj


    OP, are you expecting interbank rates or what's your beef? This uplift has been going on for years, it's 2.25% with my BoI Mastercard.

    And as someone has pointed out, it's better than the rate that Amazon will give you if you elect to pay them in Euros. I've bought from Amazon twice in the past month and made a note of the Euro price they were offering me, in both cases I said I'd pay in GBP and the CC bill number was less than what Amazon was offering.

    Hotels in the UK also try this on (offer to bill you in Euros) and you need to be on your guard when checking in and they swipe your card, always pay in the local currency everywhere you go in the world because virtually every vendor will give you a worse rate than the CC company.


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    #21
    Geuze
    Registered Users Posts: 13,105 ✭✭✭✭Geuze


    daheff wrote: »
    whats the official FX market rate? I'm not aware of an official FX market???


    the rates people see quoted on websites as "official" are nothing of the sort. There is no official rate. For example I could buy USD at a different rate in a bank in America to a bank in Ireland. Similarily sell EUR at a better price in Ireland than in Bangkok.

    Mostly the rate people see as the FX rate is a guided midpriced rate.

    But thats going off topic, and the OP is implying that Avant card are fleecing him/her by adding another FX margin to the rate Visa/Mastercard are using. This is a BIG source of income for card companies & payments companies.

    The ECB publish daily exchange rates.

    I would consider these as "official".

    See here:

    http://www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html


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