There seems to be confusion about whether the refund offering is a scam or not. As readers have demonstrated, it’s not a scam — that is, if you’re receiving official information on the refund that is the same as is available at http://www.ccfsettlement.com/.

The questions keep rolling in, and I’ve responded to the most frequently asked questions below. I’ll try to simplify the information I’ve seen at the ccfsettlement.com website, and also invite others to share their decision-making process and experiences with requesting a refund. Keep in mind that I’m not a lawyer, I’m only an interested credit card user who’s (to my dismay!) been charged foreign transaction fees for about 10 years and would like a refund.

Who is eligible for a refund?

Any person who is the primary cardholder of a US-issued

• Visa-, MasterCard- or Diners Club-branded credit, charge or debit/ATM card that was used to
• make a foreign transaction, purchase or ATM withdrawl between February 1, 1996 and November 8, 2006.

What are my settlement response options?

Currently there are three ways affected individuals may respond to the proposed foreign transaction fee settlement offer for “In re Foreign Currency Conversion Fee Antitrust Litigation (MDL 1409)” :

• ask for a refund (you choose from one of three refunds):

o Easy Refund, worth $25

o Total Estimation Refund

o Annual Estimated Refund

• exclude yourself from the settlement damages class by opting out
• object to the settlement

It’s not clear to me whether the three response options are mutually exclusive. For example, can you object to settlement and still ask for a refund?

When’s the deadline?

• Refund Request Deadline: May 30, 2008
• “Opt-Out” Deadline: February 14, 2008 (Valentine’s Day — nice touch, huh!)
• Object to the Settlement Deadline: February 14, 2008

At this point, though, the settlement is simply a proposed settlement. The final approval hearing for the settlement will be on March 31, 2008.The hearing is to decide whether to approve the settlement, class counsels’ requests for attorneys’ fees and expenses, and awards for the class representatives. (The time and date may change without further notice.)

How much is the refund?

It depends on how much you spent during the eligible period. Right now it looks like a maximum of 3% of eligible foreign transactions. (At a minimum, though, you can apply for a flat $25 “Easy Refund.”) Do keep in mind that if lots of people submit applicable claims, the maximum percentage may be adjusted so that designated settlement monies are equally distributed.

The amount of your refund will depend on the bank that issued your credit or debit/ATM card and:

• which claim form you choose,
• the dollar value of your claim, and
• the amount of money available to pay claims and the number and total dollar value of all valid claims filed. (You might get only a partial refund.)

Bottom-line I’m still asking myself:

Is now the right time to complete the forms and request a refund? There’s a bit of time before claim submission deadlines, and lots of other cases remain in process. There’s no guarantee that I’ll see a full refund, but it would be nice to have at least a little back.

What will you do? What other factors have I missed here that ought to be considered?

Last week USA Today reporter Laura Bly published an article about the Currency Conversion Fee (CCF) Settlement. The article, titled “Refunds on the way for many overseas travelers,” is definitely worth a read — not only because yours truly is quoted, but because she has asked a lot of probing questions and uncovered more details about the CCF Settlement. Particularly, she has answers for what happens if the settlement fund runs out of money to pay full refunds to all those who requested one:

If claims outstrip available money, payments will be trimmed on a pro-rated basis. Claims of more than $225 would be cut first by up to 50%, to a minimum of $225. Next, claims from $25.01 to $225 would be reduced by up to 50%, to a $25 minimum.

The possibility of diminished settlement scenarios are, if not surprising, at least disappointing. I was quoted in the article as acknowledging that “you could have bought a bottle of Canadian maple syrup online and still be eligible for a $25 refund.” But the new information also means that many credit card users may well have (regretfully — if not unwittingly) spent much more in foreign transaction fees than they will ever receive back.

Consumers should bear in mind that this is a lawsuit settlement rather than a “win.” The credit card companies don’t acknowledge any wrongdoing. If you file a large claim, it’s worth remembering that the credit card companies aren’t being required to pay you back 100% of the amount you paid in foreign transaction fees. But if you file the “easy” form, it might be the case that they pay you more than you actually spent on foreign transaction fees.

Did you pay less than $25 in currency conversion fees during the settlement period? Will you file for $25 anyway?

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).

A new credit card scheme (I refrain from calling it a scam because it’s not illegal yet), allows people with low credit scores to get instantly higher scores by purchasing a higher score from someone with a good credit score. The scheme takes advantage of a loophole in the way that reporting agencies calculate credit scores. Every time a credit card account holder adds an “authorized user” to their account, part of the account holder’s credit score is transferred to the “authorized user.” For people with low credit scores, being added as an “authorized user” to an account with a good credit score can end up saving thousands of dollars on home mortgages, loans, and almost anything that requires good credit.

However, if you have low credit, finding someone with good credit to add you as an authorized user on their credit card could be difficult…until now. Like internet dating services, new internet startups are responding by helping link people with low scores to people with high scores — for a price — usually about $1,000. One of the more established companies offering this so-called service is instantcreditbuilders.com, or ICB. According to ICB it’s a win-win scenario. People with low credit ratings can have their score boosted almost instantly, saving thousands of dollars. For people with high credit ratings, they can make around $2,500/mo with a good score and feel good about helping someone in need. In the testimonials section, ICB profiles Brian who claims:

ICB allowed me to quit my job and start a business. Let me explain how. I got out of the Army and came to live in California. I worked in an insurance agency for several years hoping to gain enough experience to launch my own agency. Around the time that I felt ready to launch, I read about ICB in the Wall Street Journal. I called and told them I had some crusty old credit cards and an 812 FICO. To make a long story short, I went from a dead-end job earning $2,000 per month to being self-employed with a $2,350 income stream. The day after I received my first check from ICB, I turned in my 30 days notice and prepared to launch my own insurance agency. I’m starting slow with group health plans, workers comp, and small business policies. Without the ICB income I would be hustling 18 hours per day just to survive. Instead, I’m spending time with my kids and growing my business at a steady pace. If you live in California, you know that $2,350 isn’t enough to survive on. My rent alone is $2,500 per month. I also have income from rental real estate, a 20-year military pension, combat disability pay, and my wife’s part time job. I should also mention that ICB is allowing me to “Pay It Forward” by helping some senior citizens use their seasoned credit lines to supplement their incomes.

According to ICB, users of the service don’t receive copies of your credit history, account numbers or social security numbers. On ICB’s FAQ, they claim that the service is 100% legal and has been used by industry professionals for years:

Yes, it is completely legal. This, technique has been used for years by mortgage brokers, bankruptcy lawyers and real estate agents to help their clients establish trade line accounts with history, to boost their credit score. Please Read – The 1974 Equal Credit Opportunity Act, for the legal statutes and codes.

Legal? Yes, but it has lenders worried, and they’re already taking action to close the loophole. From their perspective, the practice tricks them into lending money to people who are more likely to default on the loan. As this practice becomes more widespread, expect credit scoring agencies to revise the way they score a user’s credit history, effectively closing this loophole. So if you’ve got good credit and are looking to make some easy money, act fast, but here are a few risks to consider before you do:

1. You’ll be sharing your social security numbers, credit card account numbers, personal information and everything needed to steal your identity to a company who will be effectively selling your identity for personal gain.
2. If things go awry, it might be difficult to prove your identity was “stolen” by a company that was paying you to sell it to people with low credit scores.
3. There are no Federal guidelines to regulate how these companies operate. As more and more of these credit brokers pop up, it will be difficult to determine which ones intend to steal the identities of their users and those who will actually follow through and deliver a “service.”
4. Although companies like ICB portray the situation as win-win, everyone loses when people take personal lines of credit which they can’t pay back — especially those who end up declaring bankruptcy.
5. This money making opportunity will likely end soon. But once you’ve “sold” your identity, the company you’ve sold it to will have it forever. Think Dr. Faustus.

At the end of the day, if you decide to sell yourself, let me know how it goes, but don’t say “I told you to do it” and I won’t say “I told you so.”

While recent class action lawsuits have forced credit card companies to more openly disclose fees and allowed people who have been charged foreign transaction fees to recover those payments, many credit card fees have remained dubious or difficult to decipher. Finally, after 2 1/2 years of studying, the Federal Reserve Board has proposed sweeping changes to the way credit card companies disclose and charge fees. The report does discuss foreign transaction fees, and does propose some changes about the way they are disclosed. However, I’m still weighing whether the new guidelines go far enough. Keep reading for changes travelers should expect.

Generally speaking, perhaps the most significant change is that the proposed rules would require companies to apply new payments to the debt carrying the highest interest rate. Currently, many credit card companies apply payments to the balance with the lowest interest rate first. This delays the time it takes for customers to pay off the high interest rate balance, thus increasing the total cost paid for carrying a credit card balance. Customers caught in this trap are often not aware that their total outstanding balance even has two different interest rates being applied.
Read the rest of this post

I’m scanning my RSS feeds as I usually do, when I come across an MSNBC article, “Travel Abroad for Less: Cut your expenses by keeping an eye on the cost of money.” I’ve seen enough of this type of article to have a pretty good idea about what it’s going to say, but since I’m always looking for some interesting tidbit to post, I can’t resist the urge to click. The article starts me off with the usual fluff:

You’ve got your passport and your walking shoes. You’ve spent months assembling an itinerary and brushing up on your Renaissance art. You can almost feel yourself drooling while imagining that first taste of real Italian gelato while strolling through cobblestone streets.

Alright, I’m really feeling that urge to go to Italy now — I can almost taste it. Please do tell how I’m going to save thousands on that gelato! The answer? Find a credit card that won’t charge you a foreign transaction fee on international purchases:

The survey found that both Visa and Mastercard (NYSE: MA) create profits by charging 1% processing fees for purchases you make in foreign currency, and card-issuing banks tack on an additional fee. Many cards, including those issued by Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), US Bancorp (NYSE: USB), and GE Money (NYSE: GE), charge as much as 3% on what you buy abroad. On the other hand, at least one card issuer not only doesn’t charge its own fee but also reimburses you for the Visa/Mastercard fee. (You can sneak a free peek at that bank issuer with a free Green Light trial.) [See for yourself...]

What?! I do a double take. There’s a credit card issuer out there who won’t charge me a fee, but I need to sign up for a “free trial” of Green Light to learn who it is? Now I already know there’s a credit card that reimburses fees charged by Visa and MasterCard, but I was surprised that I needed a free trial for them to tell me. (If you don’t know what the credit card is, read on, I’ll tell you — for free!) For starters, I’m reading MSNBC, so I figure the news will come with no strings attached. To MSNBC’s “credit,” this is really a “Motley Fool” article which MSNBC is reprinting, and I’m only writing about it to offer a segue into naming the mysterious card that will likely be revealed when you sign up for the free trial of Green Light: Capital One.

I’ve seen several posts from readers questioning whether Capital One has changed their policy on reimbursing card holders’ foreign transaction fees that Visa and MasterCard charge. The answer, I think, is no. Capital One still does not pass along the fee. After grilling card service representatives and scouring my credit card’s fine print and terms of service, all indications are that Capital One has not changed their policy. I’ve also manually calculated fees on foreign purchases made with my Capital One credit card and do not see any evidence of a 1% fee being assessed. Of course I don’t work for Capital One and can’t speak officially for the company. And since other readers are apparently getting mixed signals when communicating with Capital One, this might be worth keeping an eye on.

Furthermore the Washington Business Journal recently reported (for free, believe it or not) that Capital One is slashing 280 jobs and restructuring their credit card unit:

“This decision is about creating efficiencies and enabling innovation so that we can continue to compete effectively in a mature card environment,” Rakes said. [Read more...]

Changes are definitely afoot at Capital One, and I get a little queasy when businesses start talking about “creating efficiencies.” I suppose we’ll find out eventually whether, in addition to firing 280 people, these efficiencies include increasing card holder fees.

Finally, I didn’t sign up for a free trial of Green Light. I’m only assuming that the card issuer is Capital One because there is only one credit card I’m aware of who doesn’t charge foreign transaction fees. If I’m wrong, please be the one to let me know!