You may have noticed some new charges being posted to your bank statements in recent months. These new charges, which are actually more likely fees, are often called Foreign Transaction Charges. You might think these are normal everyday charges that have been happening for years, but in reality they’re in response to the recent government legislation that has placed limitations on how banks can collect and charge for services.
Kind of ironic if you ask me.
In the past, Foreign Transaction Charges were only charged when there was a currency conversion. So if your US currency had to be converted, the fee covered the cost of converting the currency. Now regardless of the currency in question, the fee is applied.
Banks and card companies are now claiming that the fees are to cover the overhead from running international services. Consumers claim the banks and card companies are trying to cover the losses from not being able to charge ridiculous fees for overdraft charges. If you can’t charge a large fee to consumers, one of the provisions in the recent legislation, charge small fees and bleed the profit from the account and card holders.
Your fee is coming from either:
While these fees are usually in the 1-5% range, the overall income from these charges should prove to be quite high for the card companies and banks.
Of course with only $4.4 billion in profits, like Bank of America had last year in 2010, you can see why they need to increase their bottom line.
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