My wife has a Chase credit card with No Foreign Transaction Fees. I have the Capital One credit card also with No Fees. Why do we receive different rates when we make purchases internationally?
All things being equal … if you and your wife both make a credit card transaction at the same store at virtually the same time for the same amount, you might think that the amount charged to your Visa or Mastercard would be the same. But that is not necessarily the case.
For the sake of this explanation, I am assuming that both have credit card currency conversion fee free cards(with No Foreign Transaction fees or surcharges).
The foreign currency conversion rate is determined by the company that YOUR card issuer (ie: your home bank) has chosen to perform currency conversion calculations.
Most banks contract with VISA or MASTERCARD foreign currency services. However, they aren’t required to do so. A bank can choose a third party rate provider that may not have as beneficial rates as Visa or Mastercard. And that is why two cards might have different rates on the same day for the same transaction.
Another reason why the amounts might be different is the method in which YOUR bank processes the transaction. Some banks (Capital One, Schwab) process the conversion at the time of PURCHASE. Other banks (Chase) process the conversion at the time of POSTING to your account. This can be a difference of minutes or days — and this can have a major affect on the rate differences between cards.
In my experience of having credit card accounts at both banks, Chase exchange rate is NEVER as high as Capital One. I’ll post proof of this to the “street-rate” proof section.
I have had a lot of difficulty in locating “proof” of when the various banks apply the currency conversion. Here is the best I have found. (The Chase quote is from the Chase Canada card; but I believe the data is the same for all US Cards).
Visa states that it is up to the merchant’s policy about when they process and whether they are “slow or fast” to process the transactions.