Managing Your Travel Business: Help Your Clients Avoid ‘Surprise’ Credit Card and Currency Fees
by John Hawks

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It gets worse. When he turned in his rental car at the airport, the company (a major American brand name) charged him 2.5 percent to convert the charges into U.S. dollars. Then, when he received my credit card statement a month later, he saw that his bank had charged a 1 percent "international service charge" on top of the rental car company fees! Is this legal?

Unfortunately, the answer is "Yes" in almost every case. Warn your clients not to be misled by travel Web sites and travel suppliers like hotel companies and car rental firms that quote overseas prices in U.S. dollars in their print and online ads. While that practice seems to protect your clients when they travel abroad, their final bills will fluctuate according to currency exchange rules in many cases.

As an experienced home-based agent, you can always confirm for your clients -- directly with the suppliers, in writing -- that they'll actually pay the final bills in U.S. dollars. Beyond that, you can usually find much better deals for your clients through your agency's buying power and your experience in dealing with non-U.S. hotels, airlines, and travel companies in general. Your clients should avoid any travel plans that will basically require them to exchange their money more than once, because they lose a percentage of their buying power with every conversion.

Finally, you should recommend that your clients talk to the banks that issue their credit cards about the exchange and transaction fees for non-U.S. purchases. While Capital One and MBNA do not currently charge currency conversion fees, many other banks add 2 or 3 percent in fees on top of the 1 or 2 percent charged directly by Visa, MasterCard, or American Express. Amazingly, Visa unveiled another policy in April 2005 that adds a 1 percent fee on every foreign transaction -- even if the local merchant has already converted the price for your clients!

(Note: These fees and rules were current at press time, but they are subject to change without advance notice. It always pays for your clients to confirm them before their next trip.)