Today I got a bill from American Express. I have the Gold Card, so I pay about $150/year just to carry the card. Why? Because supposedly there is built in protection, extra points you can redeem for gift cards and products and you are supposed to get a superior level of service. Quite frankly that is all bull$h!t. Rarely I curse, but American Express has been a real thorn in my side for over a year now. Mind you, I’ve been a card member since I was 19, well over 20 yeas now. And they continue to treat ME like an ATM rather than a customer. Remember, whenever I use their card, they get a larger percentage of that purchase OVER MasterCard & Visa. So why do I pay them $150/year to carry their card? I guess part of it is because I once believed they would protect me from fraud and a higher level of service, but also because I know that it would help discipline me and my spending. For example, if I did not have $500 now in my pocket, I know I could still make that purchase and pay it off in 30 days after I got the bill. However, they changed their tactics. Now you must pay that bill 2 weeks after you get it. So why not pay cash? Sure, I get the points I can redeem, but how about this scenario: I check into a hotel in Brazil, and for convenience I choose to pay for it with my American Express Gold card, not just for the points, but in case they try to charge me for something stupid like $20 for a coke I took out of the minibar, or a towel they claim I did not return for the beach. I got my bill today, and everything was in order, except, I was charged by AMERICAN EXPRESS $40 for a transaction of $1400 for a week’s stay at this hotel. As stated, I’ve been a card member for over 20 years. I’ve been to Italy, Sicily, Mexico, Turkey and never once did they charge me a “Foreign Transaction Fee”, but this time they did. I am sure sometime they sent me a postcard sized letter with fine print even my perfect vision could not read, nor could my lawyer, and this is how they justify the charge “you were informed via mail that the account policy has changed”. But this is a new trend. Let’s face it, whether they take money in my hometown, Oklahoma, Brazil or Italy, it does not matter to them, its a global economy and they are an international company, it takes their computers all of a millisecond to convert the exchange rate and apply it to my account. I could live with a charge of $1 just because they are greedy and assuming I made 20 transactions, that would be $20, but to charge $40 on a single transaction goes beyond greed and into the realm of abusive, illegal (or should be) and even mafia loansharks don’t care where you spend the money, as long as you pay them back the loan at the agreed rate.
Lesson Learned: BEFORE you travel abroad, call your credit card company and ask if there are added fees for foreign transactions. If so, carry cash and/or find a company that does NOT charge for foreign transactions. Carrying cash presents a few problems: 1) If they do not accept American dollars, they can quote you an unfair or inaccurate exchange rate, costing you more than and therefore taking advantage of the fact that you do not know the exchange rate and/or punishing you for not carrying foreign currency with you; 2) No consumer protection, if you carry cash and pay cash and later find out you were overcharged, there is no going back to dispute the charge. At the same time, if you use a credit or charge card and you are unfairly overcharged, you can dispute it, but instead of the immoral and/or criminal establishment (restaurant or store owner) getting the money, your credit card gets the money, it is like choosing the mafia, the beggar or the mugger to give your money to; 3) Carrying a lot of cash for 1 week’s worth of expenses is obviously problematic, as you can be mugged, robbed and/or have that money lost. When you travel anywhere, I can’t see anyone taking less than $2000 even if they are traveling alone. Remember, locals can spot a tourists easily from any distance. Do you really want to lose $1-2ooo when you are stopped at a red light in a taxi? It happens, not just in other countries but right here in the USA.
Solution? Find a local bank in your area that offers a debit or credit card that does NOT charge for foreign transactions and/or a bank that might be local to that country you travel to. For example, if you travel to Brazil, Mexico, Italy, UK, South America or any of those, do some research, these banks have branches in most cases, dozens of countries. I personally like HSBC. They have branches on 6 of the 7 continents. Every bank has its problems and pitfalls, so be wise when traveling. Carry some cash from your country, some more from the country you are visiting, and a credit card that is accepted and without fees if you use it abroad. This way, not all your eggs are in one basket, and you have options to pay the $10 for pizza when you know its a legitimate cost, or $1000 when you are unsure of the exchange rate, and of course, some pocket money for the airport if you need a new pair of shoes, a magazine and/or souvenirs.
In the age of global recession, poor economy, and those who are even more greedy than ever to make up for those losses, you have to be as educated as they are. While I am not much for rap, one of the most profound quotes I’ve ever heard was from Dr. Dre who said “no matter how hard you work for your money, there is someone working 10 times harder to take it from you” — That was back in the 1990s, now I am sure you can multiply that by 100x. Sad but true, BEWARE, BE SMART, DO YOUR HOMEWORK!