Bank of America changes definition of foreign transaction fee

I have both US and UK credit cards. I use by US cards for transactions in dollars and my UK cards for transactions in pounds.

One of my US credit cards is from Bank of America. I received a letter from them saying, "We are expanding the definition of 'foreign transactions' to include transactions in U.S. dollars if they are made or processed outside of the United State. As a result, these transactions (posting on or after June 1, 2009) will be subject to the foreign transaction fee, currently 3% of the U.S. dollar amount on each such Foreign Transaction."

It seems to me that this means that whenever I use my card to purchase something from the US online, I will be subject to the foreign transaction fee, since every transaction I make will be made from outside the US, since I live outside the US.

I suppose that once one credit company starts doing this, the others will soon follow, if they haven't already.

I'm not sure that's what they mean. I think it's possible that they mean even overseas transactions in USD will be subject to the fee. For example: Madame Tousseud's (sp?) allows you to purchase its tickets in EUR, GBP and USD. I guess beforehand, if you used to BOA card to purchase in USD, it wouldn't be subject to the fee. Now, it probably is.

Which is of course completele and utter bull since the whole justification for foreign transactions fees is to offset the currency exchange rates/risk. But it's BOA, so not like it's out of character.

I'm not sure either. The exact wording is as I stated above :"transactions in U.S. dollars if they are made or processed outside of the United States".

If I order something from an American website, the transaction is being partly made outside of the United States (from my computer).

The credit card statement will just show U.S. Company paid in US$, but it depends on how BOA intepret it.

If it's an online transaction from an American website, how would they know it came from outside the US? 

If it's an online transaction from an American website, how would they know it came from outside the US? 

IP tracking. Companies do it all the time now. Try accessing HULU from your UK address, for example. Heck, MLB.tv has gotten so good at it, they can lock you out of a baseball game if it's blacked out in the area you're logging in from.

I'm not sure either. The exact wording is as I stated above :"transactions in U.S. dollars if they are made or processed outside of the United States".

If I order something from an American website, the transaction is being partly made outside of the United States (from my computer).

The credit card statement will just show U.S. Company paid in US$, but it depends on how BOA intepret it.

I'm not sure your amazon example would fall under this, though can't be sure, obv. Even if you are logging in from the UK, the transaction is concluded in the U.S. Likewise, it is processed there. If they'd said "made from outside the US" I think maybe then it'd be different. It's like you calling your mom's neighborhood florist to buy some flowers for her on mother's day. I doubt it'd be subject to the fee, even if you are calling from the UK, assuming you're using you US credit card.

I do think this applies to foreign companies that let you pay in dollars for their product, but that's probably best verified with someone from BOA.

Oh, I know that the internet companies can tell where you are, but how does the bank know?  All they'd see is a transaction for X dollars from Y American website.  How could they know where the person was when they placed that order?

Oh, I know that the internet companies can tell where you are, but how does the bank know?  All they'd see is a transaction for X dollars from Y American website.  How could they know where the person was when they placed that order?

I'm not sure that they would, actually. But if they did want to, I'd assume they would get that information from the transaction processor which almost certainly records the IP address of the buyer for security purposes. Or better yet, the transaction processor could just automatically add on the fee.

Disclaimer: I'm just speculating. I know how internet transactions systems work somewhat, but not enough to hazard an close-to-accurate guess.

I'm not sure that's what they mean. I think it's possible that they mean even overseas transactions in USD will be subject to the fee. For example: Madame Tousseud's (sp?) allows you to purchase its tickets in EUR, GBP and USD. I guess beforehand, if you used to BOA card to purchase in USD, it wouldn't be subject to the fee. Now, it probably is.

I agree that this is how I read the statement from the bank.

I just got a similar letter from MBNA (US) about my credit card.  They gave the specific example of someone buying something from a foreign website (Amazon UK from the US, for example).  I think that's what they are mostly trying to capture, although it might well be broader than that.

MBNA is owned by Bank of America.