If you’re an American and have used your MasterCard, Visa or Diners Club card to make purchases in a foreign country, you’ve probably just received in the mail the same thing I did a few days ago: a settlement letter from the US District Court.
It turns out that American credit card companies collectively decided upon a “Foreign Transaction” fee of 1-3% for every purchase made in another country. According to a recent class action lawsuit, this is in violation of antitrust laws. But that’s not all. The credit companies then decided to bury the fee by not disclosing it on billing statements. Very bad!
When furious cardholders finally discovered this, they fought back and won a $336 million settlement. What does this mean to you? If you’ve traveled abroad and used your credit card between February 1, 1996 to November 8, 2006, that makes you eligible for part of the settlement.
Card holders can choose between three options:
1. Easy Refund: a quick $25 in your pocket regardless of what you spent.
2. Total Estimation Refund: This is 1% of your estimated foreign transactions providing you spent a minimum of $2,500 aboard
3. Annual Estimated Refund: This is only available if you’ve had “extensive foreign travel or foreign transactions” and are willing to provide “year-by-year information.” Refunds will range from 1-3%.
This won’t stop the fees in the future, however. They will still exist, and be called out on your statement. One option to avoid this, however, is to opt for the Capital One card which doesn’t charge such fees and, as a result, the company is breathing a heavy sigh of relief for not being included in the $336 million settlement.
Related: Hidden Credit Card Charges