I received an interesting email from a reader detailing an exchange he had with HSBC about some upcoming changes to their foreign transaction fees. Part of that email reads:

I spoke this morning with an HSBC customer service representative who informed me that the bank intends to increase its currency conversion fee to 3% from 1% soon. I asked the source of the information and he said it was disseminated internally to the staff. I had called to inquire if the ATM card issued to HSBC Direct customers (I’m thinking of becoming one) also could be used overseas. He affirmed that it could, and that HSBC would not assess a fee. I then asked whether the currency conversion fee is 1 percent. He said that it currently was, but that it would increase to 3 percent, perhaps in about two weeks.

HSBC is a popular choice among international travelers because of their expansive network of worldwide banks and attractive fee schedules. However, if it is true that HSBC is going to follow through with this rate hike, their fee schedule won’t look so hot unless you happen to be a premiere customer. As the number of national institutions offering low fees for international banking dwindles, it’s worth reminding readers that many smaller banks and credit unions still have good offers for international travelers. But it’s always a good idea to double check with your financial institution what their rates are, no matter what size, to avoid unpleasant surprises!

Acting on another tip from a reader, I was pointed to a new credit card offer from HSBC.  In an attempt to reach out to the international traveler market, HSBC launched the HSBC Premier World MasterCard®.  On their website, the new card offers these benefits:

Shop with confidence across the globe, knowing that your card is accepted at over 24 million locations worldwide. Equipped with the purchasing power of a no pre-set spending limit, it’s the only card you’ll need:

• 0% Introductory APR on credit card purchases for the first 12 months from Account opening²
• No annual fee
• No pre-set spending limit³
• No foreign transaction fees on purchases made in a foreign currency

And with a rewards program the deal is sweatened:

A Flexible Rewards Program

Every time you use your card, you’ll earn rewards that ensure even more ways to indulge in a broader world of opportunities, such as shopping, dining, entertainment, travel and airport lounge access:

* A world-class rewards program with no points expiration or earnings cap
* Earn a full 1% cash back on every credit card purchase
* Redeem points for gift cards at over 40 popular retailers, or opt for cruises and vacation packages
* Choose travel rewards good on any airline ticket - first class, coach, domestic or international - with no blackout dates
* Access deals on dining, shopping and traveling around the world through the home&Away program

Sounds good, right?  There’s only one catch catch unfortunately — to qualify you need to be an HSBC Premiere customer.  To be an HSBC Premiere customer, you need to have at least 100k dollars in an HSBC account.  So if you’ve got money, you can take advantage of this offer and HSBC’s network of international banks.  For everyone else, there’s still Capital One (or American Express).

I received a tip from a reader today that Wachovia is set to increase their international transaction fees by 1% to 2% next month. Thank you!

“Beginning August 1, 2007, we are changing the International Service Assessment fee to 2% and amending our Debit Card Agreement and Disclosure by adding the following provisions:

Service Charges

Contact Wachovia before traveling internationally by calling 800-WACHOVIA (800-922-4684) for your Check Card. An International Service Assessment (ISA) fee will be applied to each international transaction (i.e. transaction occurring in any country outside the United States, Puerto Rico or the U.S. Virgin Islands), whether or not the foreign currency is converted. The current ISA fee is 1% of the transaction amount and may be included in the transaction amount or displayed as a separate transaction on your monthly statement.”

Wachovia seems to be following the general industry trend by raising their foreign transaction fees. Additionally these fees are being applied for all international purchases — not just ones where currency is converted. However dubious this may seem, many institutions claim that their costs are higher for international transactions. That said, if currency isn’t being converted, it goes without saying that their actual costs should be cheaper than if it was. With Wachivia raising their fees, that leaves an increasingly smaller number of institutions who only charge 1% or less for international transactions.