A reader recently alerted me to these pictures of the debit card fishing ATM scam that is reportedly being done in Europe. The following images were taken by a surveillance camera at an Italian Bank. According to the date stamp this scam has been around a while, but the pictures serve as a good reminder to be observant and level headed whenever you’re using ATMs. These pictures were originally posted on Italian website, but with a little help from Google Translator and some common sense, here’s how the scam works:

Would-be thief appears to be making a normal ATM transaction:

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Some readers tipped us off to CitiGroup’s recent recent decision to increase foreign transaction fees for using their ATM card internationally. The rate increases come just in time to catch travelers as they set off for the holidays. Those who actually read the fine print and realize that the fee has gone up now face higher fees for their purchases this holiday season or will have to bear the extra costs until they have time to find a new bank.

The new fee is 3%, up from 1%, with conditions applying for using the card at another bank’s ATM.

An interesting comment from Ingvar Strom suggests that CitiBank might also be skewing the base exchange rate upon which they add the foreign exchange rate to. If Strom’s right, the effective fee that CitiBank is charging could be considerably higher than 3%:

Then in 2006 I started being charged a foreign fee of 1 percent on top of the conversion of 1 to 1,5 percent over the FX prevailing market value. And now in December (nice Xmas gift!) it seems looking at some recent transactions you have increased the foreign fee to 3 percent and the conversion Euro to USD seems closer to 3 percent over prevailing FX spot rate. Thus from my point of view the cost of using your ATM card for ATM withdrawals/purchases in foreign currencies has gone up by whopping 400 percent in a span of a year and now costs an exorbitant 6 percent! And this happened without the decency of advising customers, which is really a shabby business practice I did not expect from a world-class company.

Click here to read more about CitiBank’s ATM fees in the directory. Please post your comments there as well.

The New York Times wrote an article today about American citizens living overseas who give up their citizenship rather than pay taxes to a country they don’t live in. The United States is the only developed country that taxes its citizens who live in a foreign country. Not only that, the United States taxes its citizens who have become permanent residents of other countries as well. Most countries do not tax their citizens living abroad, and therefore do not push their citizens to make the difficult decision of renouncing citizenship.

To add insult to injury, the Republican Congress, despite all its talk of tax cuts, actually drastically increased taxes for those who live outside the U.S.

But after Congress sharply raised taxes this year for many Americans living abroad, some international tax lawyers say they detect rising demand from citizens to renounce ties with the United States, the only developed country that taxes it citizens while they live overseas. Americans abroad are also taxed in the countries where they live.

“The administrative costs of being an American and living outside the U.S. have gone up dramatically,” said Marnin Michaels, a tax lawyer with Baker & McKenzie in Zurich. (Read more…)

According to the NYT article, only 509 Americans have given up citizenship so far this year. For more information about the newly enacted tax regulations, click here.

We’ve been hearing more and more reports from travelers who go overseas and are charged by merchants for using credit cards. In one case a person was even pressured by the merchant to use a different credit card. This practice is called “steering.” A merchant will tell you that they do accept credit card X, but encourage you to use a different card instead. In more egregious cases, a merchant will tell you that they absolutely will not accept a certain card for what you want to buy — even though their store window says they will. Why are they doing this?

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A couple month ago, we wrote about the dangers of using debit cards to make purchases at gas stations. Unfortunately it turns out that many of those same dangers apply when using debit cards for car rentals as well. Not only that, additional risks apply. Since people are increasingly using debit cards to make purchases and since many car rental companies will accept payment in the form of a debit card, the risks are worth being aware of.

The problem for consumers arises when the car rental company puts what is usually called an “authorization hold” on the debit card during the time of the car rental. This amount varies depending on the rental company and type of car, but is usually between $200 and $400. Although the money is usually refunded to the account (unless the car is damaged or unreturned), on a debit card this refund may not occur as quickly as expected. It can take some banks weeks to release funds back to your debit card account.

Credit cards have built in measures to protect consumers from this problem by allowing merchants to apply a “hold” on the funds without actually passing the transaction. This allows car rental companies to verify that you have funds available without actually charging you to prove it. With a debit card this is not the case.

The second issue to be aware of is the “daily spending limit” on the debit card being used. Between the “authorization hold” and the actual cost of the rental can be easy to rack up over $1000 in expenses. If the amount of the car rental exceeds the debit card spending limit set by the bank issuing, using a debit card would not be possible.

At the end of the day, if you must use a debit card to make a car rental be sure that you have more than enough money in your account to do so, and that you will not be requiring the “authorization hold” to be returned to you for a couple weeks.