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.

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.

Below is a summary of debit card and ATM foreign transaction fees sometimes known as “debit card foreign conversion fees” that we’ve added to the directory:

• National City Corp. Debit Card / ATM Foreign Transaction Fees
• Washington Mutual Debit Card / ATM Foreign Transaction Fees
• Wachovia Debit Card / ATM Foreign Transaction Fees
• CitiGroup Debit Card / ATM Foreign Transaction Fees
• HSBC Debit Card / ATM Foreign Transaction Fees

If you have information about debit card or ATM fees for other banks or debit card companies, please post the information below and we’ll add the details to the growing directory of debit card and ATM foreign transaction fees.

Nationwide Building Society, a leading financial services provider in the UK, recently took the time to offer the following detailed comments about Dynamic Currency Conversion (DCC). There has been increasing news coverage on DCC in recent months as financial institutions, travel advisers and DCC service providers debate the value of DCC to consumers. While some travel advisors have resorted to asserting that DCC is more scam than service, DCC service providers suggest that DCC offers consumers transparency about conversion fees at the point of sale. These providers aptly point out that it is often credit card issuers who charge fees after DCC has been preformed that ends up costing consumers extra money. By itself the actual fee incurred by just the DCC transaction is on par with the fees charged by issuing banks for currency conversion.

Nationwide stands out in the UK as the only high street financial organization that does not charge fees for using their cards abroad (see below). Their perspective on DCC is valuable not only to residents of the UK, but is relevant to travelers of any origin who encounter DCC. Much of Nationwide’s advice about how to handle DCC can be applied no matter who issues the credit card or debit card being used. Below are some of Nationwide’s comments about DCC and recommendations on how to handle this service.
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