Episode 81: Lies, Damned Lies and Capital One

For frequent travelers who regularly journey overseas, the credit card company with the dopey barbarian TV commercials has a seductive offer. Repeated unquestioningly by many reputable publications, including The New York Times and Consumer Reports, is this claim, appearing in the FAQ section of the Capital One website:

"Capital One does not charge a fee for using your credit card for foreign currency transactions. Foreign purchases will be converted at the foreign exchange rate in effect at the time of posting the charge."

What a deal! Other banks and credit card companies charge anywhere from $1.50 to $10 or more every time you withdraw money from a foreign A.T.M., the justification being that (1) you aren't using a branch of your home bank, and (2) the home bank or credit card company has to convert dollars to euros (or whatever).

But Capital One says it doesn't do that, at great expense to its profit line.

The truth? In anticipation of a three-week trip to Paris, I applied for and received a Capital One credit card. It was my intent to use it only out of the country, in this case from April 24th to May 16th. Normally, I prefer my debit card on trips abroad, not wanting to run up debt. But the Cap One card would save me hefty fees, especially if I paid off balances electronically with a few days of using it. You follow my logic, I hope.

This I did, incurring charges only from May 3rd to May 17th and paying them off in full well before the end of that month. Then came an "Accounts Summary". It showed four cash withdrawals and my four electronic payments, the last one on May 15th.

But here's the thing: The summary also listed four "Cash Front End Fees" totaling $41.63, directly preceding the cash withdrawals. A rose is a rose is a rose. That is to say, they have created another term for what they actually mean - "Foreign Currency Transaction Fees". The final indignity was a $5.86 interest charge, despite the fact that the balance had been fully paid in less than three weeks from first use.

There was no satisfaction to be drawn from the Capital One call center, of course. The woman at the other end seemed to have Tagalog as her native tongue.

A double pox on Capital One.