Banking For Americans In Thailand 101

[TallGuyJohninBKK]

Hence again it is the US rule that is the exception globally. I'd also note that there are various riders, ifs and buts within the US system on credit card liability as well. US tends to have a rule and list 50 riders, this is in line with US having a constitution and rules based legal system. Thailand's rules are more like say the UK. Less prescriptive and case by case/ case law used more. This doesn't just apply to credit cards, but whole of the legal system

Re your comment above about U.S. credit card liability rules having "ifs and buts," if you're referring to something specific, please post/cite a clear factual reference to exactly what you're talking about...

Laws are always written in legal language... But in actual practice, the $50 limit on U.S. credit cards for fraud liability functions pretty much exactly as advertised. I've lived and banked in the U.S. for my entire life. In any good faith situation, the credit card company is going to follow the law and the consumer will be protected.

In Thailand, no protection at all for fraudulent charges on lost/stolen credit cards.

[TallGuyJohninBKK]

BTW, I want to be very clear about this...

All of my comments and answers above are absolutely not based in any kind of "the U.S. is great" nationalism... Farthest thing from the truth.

My comments are ONLY based in hard cold cash, dollars and cents economics...

If the Thai banks were offering a 10% APR credit card that protected my account in the event the card was lost or stolen, I'd take it -- (assuming they'd give it to me without a work permit...which is an entirely different discussion.)

If the Thai banks offered a competitive bank account with meaningful deposit insurance and that didn't charge me a fee every time I sneezed, I'd take it. And so on and so forth.

But the unfortunate answer is, they're not doing those things. They're just not competitive with the other options that at least Americans have available to them.

[fletchsmile]

BTW, I want to be very clear about this...

All of my comments and answers above are absolutely not based in any kind of "the U.S. is great" nationalism... Farthest thing from the truth.

My comments are ONLY based in hard cold cash, dollars and cents economics...

If the Thai banks were offering a 10% APR credit card that protected my account in the event the card was lost or stolen, I'd take it -- (assuming they'd give it to me without a work permit...which is an entirely different discussion.)

If the Thai banks offered a competitive bank account with meaningful deposit insurance and that didn't charge me a fee every time I sneezed, I'd take it. And so on and so forth.

But the unfortunate answer is, they're not doing those things. They're just not competitive with the other options that at least Americans have available to them.

A wise person learns to play the systems and take advantage of where Thai banks are the better option and foreign banks where they're not. Prejudice towards one or the other isn't the answer. Take the best of both.

On credit cards APR:

Solution: Pay off your balance each month. Thai banks have an auto-payment facility by direct debit, so you never need miss payment and never need to pay interest. If you need to pay interest, that means you can't afford the items you are buying. I really don't care what the APR rate is. {BTW they are not blanket 20%, Thanachart is 15%, some banks offer different rates on Platinum etc. Unlike some US banks they don't charge amounts like 79% should you miss a payment}. Get yourself sms updates to be alerted whenever your card is used.

Thai deposit guarantee amount currently exceeds the US, and has done for several years. US deposit insured used to be $100k. They had to raise the amount to $250k because of the US banking crisis and number of banks failing. The increase was originally intended to be temporary, but has been made permanent because of the US public's lack of confidence in its bank sector among other things. In contrast the Thai banks were unlimited guarantee. They have reduced it now to THB 50mio (USD 1.6mio), and next year will decrease to THB 1mio (USd 33k). Thai banks are generally well run compared to US banks in terms of safety of your deposit and risks they are taking, Thai people have confidence in them, so the amount is decreasing.

As this Thai reduction is a recent phenomenom and US increase also recent (last couple of years) it is misleading to say this is why you didn't open an account. The length of time you've been here, Thai guarantees have so far been higher. It only reduces to THB 1mio next year in August - probably for the first time in decades! I wouldn't be surprised to see the US amount gradually fall back over time, if they can solve their crises, and get people to trust them again.

I don't know why you are paying charges on your Thai bank accounts. The only fee I pay is THB 100 per year for an ATM card at each bank.

Now off the top of my head, some of the benefits of banking in Thailand compared to banking only with US if you live here, and pick the right banks (not all banks offer but there is definitely a choice unlike your suggestions):

- Thai bank will lend money to Thai spouse guaranteed by foreigner so you can have a mortgage and buy your home. US banks generally won't lend vs property/condos in Thailand.

BTW Look for an offset mortgage, where they will also net off a THB savings account balance with a THB mortgage. Great way to save money and get better rates.

- Free ATM withdrawals at any Thai bank. No need to go looking for AEON and no need to pay THB 150.

- Free internet transfers to any bank in Thailand

- Cash back for using credit card at various places. eg Restaurants, supermarkets, petrol stations. We receive several thousand baht a year credited back to our bank account. Far exceeding the THB 100 ATM card fee

- Discounts at various places when you use a credit card

- No worries about exchange rates as all transactions are in THB. Frequently using a US bank account in Thailand will incur things like ATM fees this end unless you are prepared to walk miles for the "right ATM", and there will always be a spread on the exchange rate used vs USD (hidden cost)

- I would further add, my transaction costs for converting FCY into THB are minimal. Zero transfer cost for the SWIFT tfr out as a priority banking customer, and using an overseas bank that has a presence in Thailand too, so no charge either end. Do a larger amount telephone them and ask for them preferential rate via treasury. One bank actually telephones me in Thailand whenever money comes in, to check if there are any special needs.

- Ability to pay many Thai bills online or via autopay. Never miss a utility bill payment, or credit card bill payment, so never incur penalties and fees.

- Assistance buying THB investment products. Unit trusts, mutual funds, ETFs,in equities, bonds, gold, commodities etc. No tax on any of these in Thailand either if you select the right products. That's no capital gains tax here and no income tax on many investment products, often run by the same companies as overseas

- Not having to worry about exchange rates and timing as reasonable assets already here in THB

- Personal relationship manager to help with any queries and problems, who is just a telephone call or email away

- Generally more convenient to be able to go into your branch or call locally if there's an issue - no time difference, face to face etc

Thai banks are not perfect. In reality a combination of banking in your home country, banking offshore and in banking in Thailand is usually best. Ditch the natural prejudices and learning the systems is the optimal answer. To say one is better than the other is just misinformation. There are pro's and con's. For sure tho', anyone living in Thailand without a Thai bank account is not using their money as efficiently as they could

Edited December 3, 2011 by fletchsmile

[TallGuyJohninBKK]

Fletch, I agree to use things where they make sense for the user... wherever they may be.... I have no prejudice, except to want to save and earn money, and not give it away needlessly to banking companies. But some of your comments are just off-base..

--Lots of people sometimes use revolving credit to help manage their finances and expenses... It's silly to say anyone who does that can't afford what they're buying. My U.S. credit cards often offer me 0% interest for a year on no fee balance transfers... I'm happy to make use of those offers for my own benefit, like income tax bills, annual health insurance premiums, etc.

--Yes Thai banks' credit cards offer various kinds of rebates and benefits.. But you're paying for them... Most all the Thai bank credit cards I've looked at have hefty entry fees and annual fees thereafter, the more the benefits, the higher the fees. Not to mention, full liability for any fraudulent charges on lost/stolen cards.

--Free transfers between any banks in Thailand? On the Thai bank accounts I'm familiar with, they charge for internet banking transfers to other accounts within the same bank if they're outside the area of your home branch. And Thai banks in general most certainly have charges for online banking funds transfers to other bank company accounts.

--Most Thai banks accounts I'm familiar with don't offer free ATM withdrawals at any other Thai bank ATM.

--The U.S. didn't increase its government deposits insurance limits solely because of the banking environment. Rather, the $100K amount had been in place for many many years and had never been adjusted for inflation or anything else. Yes, the $250K was originally intended as a temporary measure, but was ultimately made permanent. I'm glad it was, and not because I have any fears. It simply helps promote confidence in the banking system and encourages people to save. More countries should do the same.

--Please post here the link to whatever Thai bank credit cards you're referring to that only charge an annual fee of 100 baht and still offer the kind of benefits you describe. I think you're mixing up debit/ATM cards and credit cards. The debit cards have 100 or 200 baht annual renewal fees. The Thai bank credit cards I've seen are substantially higher than that in terms of their entry and renewal fees.

--Personal relationship manager? You mean like the BKK Bank manager who was so helpful to the OP in the thread about how BKK Bank won't reimburse its cardholders for fraudulent charges to their cards... and the OP's local bank manager, according to the OP, simply said.. can't help you... sorry.

It would be helpful, and more useful for readers here, if you'd actually source and document the various claims you're making about various benefits and fees or lack of them regarding Thai banks, so everyone can judge them for their accuracy and context.

The Thai bank accounts I'm familiar with are the every-day ones offered by the regular Thai banks to ordinary customers without any unusually large account balance requirements or similar gotcha's... If you're talking about other kinds of things, like private banking arrangements with Standard Chartered where a very substantial minimum account balance is required, you should at least say so.

Unless you're prepared to provide specific, concrete examples of the advantages you're claiming, it's kind of hard to debate in a vacuum.

Edited December 3, 2011 by TallGuyJohninBKK

[fletchsmile]

Too many quotes so need to split:)

--Lots of people sometimes use revolving credit to help manage their finances and expenses... It's silly to say anyone who does that can't afford what they're buying. My U.S. credit cards often offer me 0% interest for a year on no fee balance transfers... I'm happy to make use of those offers for my own benefit, like income tax bills, annual health insurance premiums, etc.

I suggest you watch more of your Suzie Orman:) These promotion periods are to lure people in. get you in the habit of not paying things off. While you may "take advantage", many people start off this way, and then hit a slippery slope as they get into bad habits of not paying it off. My solution: set up your finances so you don't need them.

--Yes Thai banks' credit cards offer various kinds of rebates and benefits.. But you're paying for them... Most all the Thai bank credit cards I've looked at have hefty entry fees and annual fees thereafter, the more the benefits, the higher the fees. Not to mention, full liability for any fraudulent charges on lost/stolen cards.

Not true. As above I pay only ATM card 100 baht. My visa card is free as long as I spend over THB 20k a month on it on average. It's a platinum elite card. Platinum is free with 10k a month.

BTW You could even use rewards points to pay for it, if you don't meet the 20k a month average. I've acummulated loads of points to do this. Reward points also let you get free gifts eg electric equipment. Put your flights back home on it. Free insurance

This is not just limited to Platinum tho' and goes down to the basic card levels too. Just you get more benefits with Platinum

--Free transfers between any banks in Thailand? On the Thai bank accounts I'm familiar with, they charge for internet banking transfers to other accounts within the same bank if they're outside the area of your home branch. And Thai banks in general most certainly have charges for online banking funds transfers to other bank company accounts.

Not True. This just highlights the misinformation and lack of information out there. These banks exist. eg Standard Chartered (Thai). No fees for other banks ATMs. No fees for internet bank transfers. It pays to also use someone like BBL in addition. Although they aren't free unlike Stan Chart, they have one of the widest ATM networks in the country.

.....

Edited December 3, 2011 by fletchsmile

[fletchsmile]

--Most Thai banks accounts I'm familiar with don't offer free ATM withdrawals at any other Thai bank ATM.

Sorry but that's just your own limited knowldged. Stan Chart - local entity - Thai bank status. 30+ branches. Fewer ATMs, so they compensate by making other people's ATM's free. BBL again has one of the biggest network but changes

--The U.S. didn't increase its government deposits insurance limits solely because of the banking environment. Rather, the $100K amount had been in place for many many years and had never been adjusted for inflation or anything else. Yes, the $250K was originally intended as a temporary measure, but was ultimately made permanent. I'm glad it was, and not because I have any fears. It simply helps promote confidence in the banking system and encourages people to save. More countries should do the same.

While there may have been other reasons, the main reason was the total lack of confidence in many foreign banks, liquidity crisis and problems some banks had. It is no coincidence the timing coincided with the collapse of certain banks in US, Europe and UK. The crisis was what made them. I would be wrong to say they realised they hadn't updated, and the crisis just happened to be a benefit. It's correct to say the crisis is what made them think about this. US collapses. Northern rock, Iceland banks, Ireland Banks. These were the reasons US, UK and Europe updated their amounts. So yes more countries did do.

--Please post here the link to whatever Thai bank credit cards you're referring to that only charge an annual fee of 100 baht and still offer the kind of benefits you describe. I think you're mixing up debit/ATM cards and credit cards. The debit cards have 100 or 200 baht annual renewal fees. The Thai bank credit cards I've seen are substantially higher than that in terms of their entry and renewal fees.

Asking for links to be posted is just tedious. What people are saying more often than not is that they don't believe someone. On this occasion I'll look one up, but it does get tedious posting when people don't believe you, or don't like to admit they don't know as much as they think they do. One min search reveals:

http://www.bangkokbank.com/Bangkok%20Bank/Personal%20Banking/Credit%20Card/Credit%20Cards/Credit%20Card%20Promotion/pages/free_fee.aspx

This is by no means unique.

I'd also add that many of the Thai people I know say that no-one really pays the fee on the card anyway. You just ask them to waive it, and threaten to cancel the card. They have discretion. I've also done this. At Bank of Asia many years ago, thru to UOB.

....

[fletchsmile]

--Personal relationship manager? You mean like the BKK Bank manager who was so helpful to the OP in the thread about how BKK Bank won't reimburse its cardholders for fraudulent charges to their cards... and the OP's local bank manager, according to the OP, simply said.. can't help you... sorry.

Learn to find your way around the system. There are good and bad employees in each bank. Premium bank at HSBC (THB 3mio of assets up - doesn't have to be cash)gets a better level of service

It would be helpful, and more useful for readers here, if you'd actually source and document the various claims you're making about various benefits and fees or lack of them regarding Thai banks, so everyone can judge them for their accuracy and context.

I've little interest in being judged. I find it a waste of time to look up and try and find links. It also doesn't take long to realise who talks rubbish on certain topics and who doesn't.

To your credit you've spent a lot of time researching the US in particular, and some of the Thai elements. On the Thai side, if you go in with a closed mind, and believe half of what is written on blogs, it's no surprise you find the answers you're looking for and want to see.

The Thai bank accounts I'm familiar with are the every-day ones offered by the regular Thai banks to ordinary customers without any unusually large account balance requirements or similar gotcha's... If you're talking about other kinds of things, like private banking arrangements with Standard Chartered where a very substantial minimum account balance is required, you should at least say so.

Unless you're prepared to provide specific, concrete examples of the advantages you're claiming, it's kind of hard to debate in a vacuum.

Well I'd say if you need USD 250k deposit protection, and worry about that, you've enough to set yourself up with a premier service at a Thai bank or foreign bank like HSBC or UOB. (Usually USD 100k equivalent) You can't have it both ways

For info Private Banking in this region is usually USD 1mio up, and wasn't what I was referring to.

Not to be confused with premium banking at USD 100k up - again doesn't have to be just cash. I assume someone like yourself is in this category should they wish and choose to be. Several Thai banks have a premium, priority or prestige segment - diff names used. Suggest you use google keywords. Thanachart BTW has a segment somewhat between premium and private.

Normally I don't bother debating these topics anymore as you put it, as most people are using what they've heard sometimes in a bar or read on a website or blog page etc, and the views and myths become self perpetuating. "Debating" simply ends in spending more time providing links to prove your points.

I find it somewhat similar to describing a Picasso, and someone asks you what colour is it?

Appreciate you've spent some time on this subject, and it's something of a hobby for you. Part of the problem for many people is they've often made their mind up beforehand. Bit like losing your keys. People repeatedly look in the same place for their answer

I should add, that I've done several jobs in Thailand in banking, finance etc, and dealt first hand with regulators, compliance, risk, training etc etc. So no, I don't always have a link or quote, just years and knowldge of experinece, here in Asia and other places. Now someone either belives that or not

Edited December 3, 2011 by fletchsmile

[fletchsmile]

On another theme, as posted on another thread, the US financial system is in a bad way

http://www.informationclearinghouse.info/article29858.htm

Not saying I agree this. However, there is a risk of total collapse in the US financial system, and that risk is real.

One of the flip sides of some of the criticisms about Thailand, which do have some validity actually makes it a reasonable place to put some money. Protectionism, nationalism, lack of competetion, too many restrictions, inflexibility etc are annoying sometimes in Thailand, but if it all goes heads up in the US, the Thai banking sector is somewhat insulated from this, and the controls over the Thai banking sector could actually prove a blessing. So it's worth putting a few eggs in the Thai basket.

Those $250k guarantees are worthless if the US financial system collapses. Thailand would be somewhat of a safehaven in comparison:)

BTW Similary should Thailand collapse, it's worth having money elsewhere

[misterdowntown]

Thanks for the compliment... Be interested to hear what the Thai bank branches in L.A. have to say...

As I said before, I think I asked them that same question by telephone once upon a time...and it was a no-go... But times and things change, so who knows....

Just a Follow up to TallguyjohninBKK on what was advised to me from my questions a few weeks ago. Now in Thailand, No you can't set up a Thai account from the LA Thai bank offices, has not changed,

and never will based on what I got from the person on the other end.

Yes easy to set up account once I got here, already had a lease on condo in hand, passport and entry card, took 30 mins and set. Open account cost 300 baht for set up of

debit card. Have not tried it yet I'm sure it will work just fine.

Now for the transfer of funds, either from my B of A account, or schwab account. Having brought some cash in, no rush, but want to make sure its locked and loaded, so have

no problem.

Have printed out the easy to follow instructions, and will a happy man once the Thai account has been filled.

Again Thank you for this thead, you have made my life just a little bit easier, getting myself set up in Thailand. The internet is a wonderful thing.

Edited December 11, 2011 by misterdowntown

[TallGuyJohninBKK]

Glad to hear everything's going well thus far... Just be prepared for potential bumps in the road somewhere along the line. But if you don't encounter any, you'll be doing better than most...

If you're using the BKK Bank NY branch for your international transfers headed for a BKK Bank account in Thailand, you can do free domestic ACHs online from Schwab to BKK Bank New York, and then pay BKKB's relatively small fees for the rest of the way...

If you do a domestic ACH out of your BofA account, I believe they'll charge you $3 per outbound transfer, unless you have some kind of special account status with them.

You can also do online international wire transfers out of both BofA and Schwab to any Thai bank account in Thailand. But the fees involved will be different.... particularly on the sending U.S. end.

Depending on whether you're using BKK Bank or a different banking company in Thailand for your local account here, you can compare the relative costs of each approach, depending on the amounts you're planning to send.

Generally speaking, of course, it's more economical to do one larger online ACH or international wire every couple months, vs. doing separate smaller ones month by month.

Unless, the funds you're moving are coming from Social Security or a federal type pension, in which case you can set up an automatic, recurring direct deposit of those monthly payments direct to a BKK Bank Thailand account.

Lastly, since we've been discussing it a lot here lately, keep in mind that any Thai bank debit or credit card you may end up having has very little consumer fraud protections, unlike U.S. issued cards. Basically, in the event of loss or theft of the Thai bank card, you're typically responsible for all charges up to your card's limits prior to when you report the card loss or theft to the bank.

So when you set up any new Thai bank account, make sure to check about what the default daily limits for ATM withdrawals and POS (point of sale) purchases are for that particular card. And then have the Thai bank change them to fit your personal comfort level.

Remember, there basically are no PIN based debit card transactions here for VISA and MC logo debit cards.... everything is swipe and sign...and the merchants rarely bother to ask for ID or even check the signature on the back of people's cards. So if your Thai bank card were to fall into the wrong hands, your accounts could be in serious danger unless you've taken the appropriate precautions ahead of time.

On the flip side of the coin, the Schwab Bank debit card carries full U.S. consumer and anti-fraud liability protections, has no foreign currency fee, and even reimburses the 150 baht fee that Thai banks charge for using their ATMs.... The alternative is to use AEON ATMs, which don't charge the 150 baht foreign card fee but work fine with U.S. VISA and MCs, as a general rule.

[CaptHaddock]

TallGuy,

My analysis agrees completely with yours. Thai credit cards are a terrible deal in every respect. I made sure to open additional credit cards in the US before I left and now use them all in rotation to make sure that none of them drop me for inactivity. We have a couple of cards that don't charge foreign exchange or annual fees. We also keep only the minimum amounts necessary for monthly expenses in our Thai bank accounts. This all works very well for us.

Keep up the good work.

[TallGuyJohninBKK]

Thanks for the comment, Captain...

Who do you like for no foreign currency fee credit cards?

[fletchsmile]

TallGuy,

My analysis agrees completely with yours. Thai credit cards are a terrible deal in every respect. I made sure to open additional credit cards in the US before I left and now use them all in rotation to make sure that none of them drop me for inactivity. We have a couple of cards that don't charge foreign exchange or annual fees. We also keep only the minimum amounts necessary for monthly expenses in our Thai bank accounts. This all works very well for us.

Keep up the good work.

Bear in mind that while there is no FX fee, the card issuer will still be making a spread on the FX rate itself so there is still an FX cost that many people overlook. Some card issuers regularly give better rates than others - so might be worth your monitoring the rates you're getting on each of your cards.

[TallGuyJohninBKK]

TallGuy,

My analysis agrees completely with yours. Thai credit cards are a terrible deal in every respect. I made sure to open additional credit cards in the US before I left and now use them all in rotation to make sure that none of them drop me for inactivity. We have a couple of cards that don't charge foreign exchange or annual fees. We also keep only the minimum amounts necessary for monthly expenses in our Thai bank accounts. This all works very well for us.

Keep up the good work.

Bear in mind that while there is no FX fee, the card issuer will still be making a spread on the FX rate itself so there is still an FX cost that many people overlook. Some card issuers regularly give better rates than others - so might be worth your monitoring the rates you're getting on each of your cards.

Fletch, I don't know what kind of foreign bank cards you may have or use... But I'm presuming they're not U.S. issued.

The U.S. debit cards I use

--don't have any foreign currency fee on POS or ATM withdrawals.

--do absorb the 1% card network fee charged by VISA

--do ATM and POS transactions at better rates than the buying TT rates offered by Thai banks, and specifically, usually very close to the Interbank Exchange Rate and/or the same rate that AEON ATMs produce (which are the VISA or MC international network rates).

The same for no fee credit cards such as Capital One and what was the Schwab VISA card until it was killed by Bank of America.

I'm not saying that applies in ALL cases... But I can say it applies in the examples I've cited above... based on years of experience with them.

In other U.S. banks I've dealt with in the past, they typically process foreign transactions using the standard card network established rates (VISA or MC), -- instead of setting their own exchange rates -- but then make their money by charging a foreign currency fee, not absorbing the 1% card networks fee, and/or adding on their own transaction charges, such as $3 or $5 flat fee per foreign ATM withdrawal. Those kinds of banks and accounts, like BofA and many of the U.S. majors, certainly are best to be avoided by expats.

[fletchsmile]

TallGuy,

My analysis agrees completely with yours. Thai credit cards are a terrible deal in every respect. I made sure to open additional credit cards in the US before I left and now use them all in rotation to make sure that none of them drop me for inactivity. We have a couple of cards that don't charge foreign exchange or annual fees. We also keep only the minimum amounts necessary for monthly expenses in our Thai bank accounts. This all works very well for us.

Keep up the good work.

Bear in mind that while there is no FX fee, the card issuer will still be making a spread on the FX rate itself so there is still an FX cost that many people overlook. Some card issuers regularly give better rates than others - so might be worth your monitoring the rates you're getting on each of your cards.

Fletch, I don't know what kind of foreign bank cards you may have or use... But I'm presuming they're not U.S. issued.

The U.S. debit cards I use

--don't have any foreign currency fee on POS or ATM withdrawals.

--do absorb the 1% card network fee charged by VISA

--do ATM and POS transactions at better rates than the buying TT rates offered by Thai banks, and specifically, usually very close to the Interbank Exchange Rate and/or the same rate that AEON ATMs produce (which are the VISA or MC international network rates).

The same for no fee credit cards such as Capital One and what was the Schwab VISA card until it was killed by Bank of America.

I'm not saying that applies in ALL cases... But I can say it applies in the examples I've cited above... based on years of experience with them.

In other U.S. banks I've dealt with in the past, they typically process foreign transactions using the standard card network established rates (VISA or MC), -- instead of setting their own exchange rates -- but then make their money by charging a foreign currency fee, not absorbing the 1% card networks fee, and/or adding on their own transaction charges, such as $3 or $5 flat fee per foreign ATM withdrawal. Those kinds of banks and accounts, like BofA and many of the U.S. majors, certainly are best to be avoided by expats.

As mentioned it's not necessarily the fees you have to worry about - not difficult anywhere in the world to find fee free cards. It's the FX rates. As you highlight they can and do vary. That's was the point - simple Wasn't saying any method is better, just watch the rates as they are a hidden cost that people often overlook If you have several cards, compare them. Chances are you'll find some are better than others...

Edited December 13, 2011 by fletchsmile

[TallGuyJohninBKK]

Actually, I wasn't saying the exchange rates I get on my U.S. cards vary by bank. They don't.

I'm saying for the cards I use, the exchange rates are the same... which are the VISA card network foreign exchange rate.

[The terms and conditions documents for those U.S. accounts specifically say the bank isn't setting or using its own foreign exchange rate, but instead are using the VISA network interchange rate.]

And that's because the U.S. banks I use aren't tacking on any variety of fees and percentage cuts that would cause the kinds of variations you're talking about.

For the other banks, typically, their terms and conditions documents also say they use the card network rates for foreign exchange.... But then the bad ones go on to charge a 1% card network fee, their own foreign exchange surcharge, and other kinds of deductions.

Edited December 13, 2011 by TallGuyJohninBKK

[fletchsmile]

John,

You're missing the point. My posts have nothing to do with you and what you get on your own personal cards. You have a habit of making every thread about you and your personal interests.

Simply put: conversion rates do vary, across cards and banks and different networks. Processes differ between providers. In addition, factors like dynamic conversion or not also come into play, as well as posting date vs transaction date, although these are more a merchant than issuer factor.

So it pays to watch your rates and patterns on cards. Not just fees - most people should be able to find no fee cards. That's the point - simple - no more and no less.

Edited December 13, 2011 by fletchsmile

[TallGuyJohninBKK]

Fletch, I agree it's a good thing for any bank card user to watch their rates, and know the details of their transactions, as I do...

And that's why I can speak with authority on how the various U.S. banks I've dealt with handle their transactions. Because I have and use their cards, have read their terms and conditions documents, and regularly test my purchases and withdrawals against exchange rate yardsticks.

As best as I can tell. you're not an American... and I've never seen you post any indication here of having U.S. bank accounts.

So instead of making generalizations about how you think things work, if you have some specific evidence regarding how U.S. banks handle exchange rates, please post it here...

When I speak on such things on a personal level, it's in fact because I have those accounts and know from direct experience how they work... It's first-hand knowledge... not unsupported generalizations.

[fletchsmile]

Fletch, I agree it's a good thing for any bank card user to watch their rates, and know the details of their transactions, as I do...

And that's why I can speak with authority on how the various U.S. banks I've dealt with handle their transactions. Because I have and use their cards, have read their terms and conditions documents, and regularly test my purchases and withdrawals against exchange rate yardsticks.

As best as I can tell. you're not an American... and I've never seen you post any indication here of having U.S. bank accounts.

So instead of making generalizations about how you think things work, if you have some specific evidence regarding how U.S. banks handle exchange rates, please post it here...

When I speak on such things on a personal level, it's in fact because I have those accounts and know from direct experience how they work... It's first-hand knowledge... not unsupported generalizations.

John

It's nothing to do with being American or not and it's nothing to do with making assumptions.

FACT: US Banks, credit card issuers (MasterCard, Visa), charge card issuers (Amex) use different rates for converting a foreign exchange transaction across different networks.

To say otherwise is incorrect and shows you're not familiar with the facts, outside your own personal small narrow field of the cards you use.

If you can point me to something (anything) that shows that all banks, credit card and charge issuers use the same exchange rate, then I'd be interested. Otherwise it's your generalisations which are misleading people based on your own limited personal experience. Please show me this universal exchange rate or piece of legislation that says all banks, card issuers etc use the same foreign exchange rate. It was a simple point made to another poster, to check rates, unfortunately you probably mislead people now into the assumption that whatever card you use you get the same rate.

Think about it logically. Do all banks give the same tt rate? No? Do all banks give the same counter rate? No. Are MasterCard, Visa and Amex using the same network? No. Do all banks use the same wholesale rate? No. You yourself said you get near wholesale rates. Well what you need to understand is that different banks have different wholesale rates? They may be based on a common reference rate for certain transactions, but the spreads will vary.

It was a simple statement of fact to another poster. If you have several cards, it might be in your interest to watch and compare their rates.

Edit: ref to the first thing that came up on google showing exchange rates can and do differ on credit card usage:

http://education.cardhub.com/currency-exchange-study/

Edited December 13, 2011 by fletchsmile

[TallGuyJohninBKK]

Now we're getting to the nut of the matter... despite the fact that you apparently haven't ever actually had a U.S. bank account yourself...

Yes... different card networks (not individual banks, but card networks) do have somewhat different exchange rates on foreign transactions.... VISA usually has slightly better rates than MC at the network level... So all other things being equal, a U.S. issued VISA logo card usually will produce a better rate than a MC logo card.

And its those card network rates that are used to determine the underlying foreign exchange rate of international card transactions...not those of the issuing bank like Bank of America, Chase, etc...

But then, the individual bank comes into play in terms of whether it passes along or eats the card networks' 1% fee, whether the individual bank adds its own foreign currency fee, and sometimes flat fees on ATM transaction. In those cases, they're not changing the exchange rate, but they definitely are impacting the outcome.

So the exchange rates are set by the card networks.... but then the individual bank ends up impacting the NET exchange rate a person receives based on the bank's individual add-ons...

To illustrate that point, I just got a new VISA logo U.S. bank debit card the other day. I used it at an AEON ATM with another U.S. issued VISA logo debit card I have from a different bank. Back to back transactions with the two cards. Went home and checked in online banking for each transaction. Exactly the same amount debited in each bank. Because they both were VISA network cards, the transactions happened at the same time, and the two banks weren't adding anything themselves but using the VISA network rate period.

Your example of Thai banks and their exchange rates is, of course, off-point. Yes the Thai banks offer different exchange rates on currency exchange in country. Just as U.S. banks have different rates for currency exchange within the U.S.

But in most cases when it's a U.S. VISA or MC logo card making an international ATM withdrawal or POS purchase, it's the individual card networks' rates that are used... not those of the issuing bank.

[fletchsmile]

.... Some card issuers regularly give better rates than others - so might be worth your monitoring the rates you're getting on each of your cards.

I hadn't intended going thru all the details blow by blow, as I felt this was unneccessary, and thought a simple statement would do. Unfortunately....

So cutting thru all the waffle:

Some card issuers give better rates than others as John now acknowledges. This is due to factors such as: which network is used, eg MasterCard, Visa, Discover, Amex etc. In addition Visa does not just charge 1% to all financial institutions as he mentioned, it ranges between 0.15% to 1%. Some of the financial institutions effectively pass this on to you and some don't. Some financial institutions after the 2006 336(?)mio fines etc now split fees separately and separately identify them as fees, not all.

Hence given the exchange rates effectively differ on different credit cards, it might be worth monitoring.

QED

Might also be worth reading the following list, on 10 worst credit card mistakes, and for anyone still in doubt I suggest number 3 in particular number

http://money.usnews.com/money/blogs/my-money/2010/09/29/the-10-worst-credit-card-mistakes

3. Not properly researching foreign transactions fees

Before traveling overseas, you need to realize that every credit card has different foreign currency exchange rates and international transaction fees. A typical fee is anywhere from 0 percent to 3 percent. If you have several cards in your wallet, you should use the one that has the best foreign currency exchange rate.

personally, I'd add "and combined with the lowest fee" to the end...

Edited December 13, 2011 by fletchsmile

[TallGuyJohninBKK]

Some card issuers give better rates than others as John now acknowledges.

Your comments above seem to be confusing the difference between the card networks and the card issuers...

The point I made above, and haven't changed on, is U.S. banks aren't typically setting their own individual exchange rates for international card transactions. They use the common rates set by the card networks like VISA and MC, depending on which brand card you're using.

VISA and MC are not "card issuers" to use your phrase... They are the card networks...

The individual banks that grant the cards to their customers are the "card issuers."

It's really not that difficult to check, and members here do it all the time... You can go to the VISA International web site and see their exchange rates for that day for U.S. $ to Thai baht... And then you can compare those with the rates produced by your card.

Based on a lot of personal experience of using a lot of different U.S. bank cards -- unlike Fletch who has no direct personal experience -- a VISA debit card from one U.S. bank typically will produce the same exchange rate as another VISA debit card from a different U.S. bank -- provided that the two bank aren't charging a foreign currency fee and aren't deducting the card network fee behind the scenes.

[fletchsmile]

Some card issuers give better rates than others as John now acknowledges.

Your comments above seem to be confusing the difference between the card networks and the card issuers...

The point I made above, and haven't changed on, is U.S. banks aren't typically setting their own individual exchange rates for international card transactions. They use the common rates set by the card networks like VISA and MC, depending on which brand card you're using.

VISA and MC are not "card issuers" to use your phrase... They are the card networks...

The individual banks that grant the cards to their customers are the "card issuers."

It's really not that difficult to check, and members here do it all the time... You can go to the VISA International web site and see their exchange rates for that day for U.S. $ to Thai baht... And then you can compare those with the rates produced by your card.

Based on a lot of personal experience of using a lot of different U.S. bank cards -- unlike Fletch who has no direct personal experience -- a VISA debit card from one U.S. bank typically will produce the same exchange rate as another VISA debit card from a different U.S. bank -- provided that the two bank aren't charging a foreign currency fee and aren't deducting the card network fee behind the scenes.

Nah, you're just nit-picking on semantics as usual, and I'm well aware of the difference thanks. I was giving a simple one paragraph comment, designed for an end user to see they will get different rates using different cards. So they might want to check and monitor.

The fact that behind the scenes there are many reasons for this is somewhat irrelevant to most people, rather tedious to explain also. (Not sure why I bothered, but won't repeat the mistake) Banks as issuers certainly don't break out all the individual amounts of the charges passed to them on the statements they give to clients.

You're comments on my no direct experience are UTTER RUBISH. I previously worked in banking and finance for a couple of decades, including helping rectify issues from time to time particularly on IT side and where rates come from, and including various financial institutions activities including US.

Simply put you get different rates depending on the financial institution card you use. If you want to be anal about it, these include factors such as the card networks use different rates to each other. They then charge different amounts to to different financial institutions. It is not a flat 1% as you say. It varies. The banks pass on different charges. Not all of them are split out separately on a customer statement, and some are actually included in the rate, or specied only in T&A. It is not always transparent to a customer between all the fees in the chain and what is FX

As you like anal website refs, it only takes a second if you actually check. I don't need to thanks.

Your assertion that you can see and check actual rates on the website is also wrong. They are indicative only. That's why you see the same rate...

http://usa.visa.com/personal/using_visa/exchange_rates_faq.html#anchor_2

-------------------------------

What is Visa’s fee structure for international transactions?

Visa Inc. does not assess any fees to cardholders or merchants. Visa applies International Service Assessment (ISA) fees ranging from 0.15 to 1 percent to its financial institution partners for their use of the global payment system.

The fees are paid by financial institutions on transactions that require the use of our global infrastructure. Since Visa does not assess any fees to cardholders or merchants, we have no involvement in financial institution pricing to cardholders or merchants. ....

How accurate are the rates?

The rates you are shown are from Visa's internal database for foreign exchange rates and are updated daily. However, they are only meant to serve as an indication of the rate you could expect to receive from your issuing bank. As exchange rates change constantly, the rate is only accurate for one day. The exact rate you are charged depends on when the transaction is posted to the Visa system, which may be later than the day on which you paid, depending on how promptly each merchant handles their Visa transactions. Additionally, your final transaction amount may differ depending on whether the merchant converts the currency at the point of sale or if the bank that issues your card assesses a foreign transaction fee.

-------------------

I think the BKK bank guys higlighted similar on the thread for visa card fees. You seem to thrive on nitpicking semantics of what people say. Yes I'm aware of what happens behind the scenes. It was just a simple statement on a website blog, which for some reason you like to anally disect semantics word for word.

FACT: Using different bank Visa Cards you will get different exchange rates on the receiving end.

For a multitude of reasons, which most people don't care about. Many touched on above. In hindsight thanks for reminding me what a waste of time it can be explaining to people on here. Too many people just prefer to pick holes in wording rather than see the big picture....

As the BKK bank guys said on the credit card indemnity thread...Will leave you to it...

Edited December 13, 2011 by fletchsmile

[TallGuyJohninBKK]

Glad you know how to use the bold key, Fletch...

You can quote all the web site stuff you like, just as you did with a bunch of irrelevant stuff on BKK Bank and their no fraud protection for card holders thread.

But unlike you, I actually have and use many U.S. bank cards, from many different banks, and have for years....

And as I've recounted above -- based on repeated testing -- if I use different VISA cards from any number of different banks, as long as the banks aren't charging a foreign currency fee or passing along the card network fee, I get identical exchange rates for ATM withdrawals and purchases done at the same time.

Also, I never said you didn't have any experience, since I assume you have some experience about something, whatever that may be. I merely said from all indications you're not an American and aren't a regular U.S. bank card customer. And I haven't heard you contradict that.

And that will be my last comment to you here on this subject, since I don't want to waste any more space in the thread, thanks very much.

Edited December 13, 2011 by TallGuyJohninBKK

[JimGant]

if I use different VISA cards from any number of different banks, as long as the banks aren't charging a foreign currency fee or passing along the card network fee, I get identical exchange rates for ATM withdrawals and purchases done at the same time.

Amen. And even if there's a difference between each card's fee structure (e.g., one passes on the network fee, the other doesn't), when you strip-out all these fees, the core exchange rate will be the same for all VISA cards (or for all MC cards, but at a lesser rate than VISA -- see later discussion).

Your assertion that you can see and check actual rates on the website is also wrong. They are indicative only. That's why you see the same rate...

No, you're wrong, fletch. You may have to look at the next day's posted rate, for POS transactions that take a day or so to process. But, it will be amazingly right-on to the rate you receive (before, of course, any add-on fees from your issuing bank). I did this for several months last summer, using Visa and MC. The only difference I noted between the Visa and MC postings were that Visa's rate-for-the-day was posted at the very beginning of the New York working day (0001), while MC was about 12 hours later. Thus, if the merchant was tardy, you might need to look at the following day's Visa rate -- while MC's rate might match, since it is a half-day behind Visa. Nevertheless, once you figured out on which day your transaction posted, it was right on the number per the Visa or MC website -- right to the second decimal point.

Fletch, you stopped highlighting too soon. You left out the very next sentence:

As exchange rates change constantly, the rate is only accurate for one day

It's not a real time FX scenario. It's a 24-hour window. ATM/PIN transactions don't have posting lags, as do POS transactions. But, they do adhere to the 24-hour window they occur in.

I was giving a simple one paragraph comment, designed for an end user to see they will get different rates using different cards.

Only if each card has its own fee structure. As John said, if no network fee (read: International Service Fee -- ISA)is passed on, whence it becomes a Foreign Transaction Fee (either on its own, or added to by the issuing bank);and there are no flat fees, then all Visa cards -- and all MC cards -- will have the same rates per logo. Period.

From the VISA link from fletch, above:

"If financial institutions or merchants decide to assess a foreign transaction fee to their customers, they are required to provide details to their cardholders and consumers."

Since the class action on hidden FX fees, such fees will now show up on your statement. You might not know how much of the 3% foreign transaction fee is the ISA from the network -- nor would you probably care -- but your statement will certainly give you a breakdown of the fees you are paying. At least with US financial institutions -- don't know about GB. But hopefully you know the fee structure ahead of time before signing up for an ATM/Debit or credit card.

But fees aside -- and just looking at no-fee/no passed-on-fee Visa and MC cards, here's some data I gleaned this summer. I used the MC and Visa rate-of-the-day (for US$) sites, and verified with my own Visa and MC transactions. (I posted this in another thread several months ago, so I apologize to those having to read it twice.)

Average rates:

X-Rates:.....30.00

Visa:........29.92

Buying TT:...29.84

MC:..........29.76

Note the 8 satang gaps between each category. And the 16 satang gap between Visa and MC! Having a Visa credit or debit/atm card could really add up over the years, in comparison to MC.

And the gap between X-rates and Visa? Well, the X-rates figure reflects wholesale/interbank exchange rates -- the rate that Visa and MC -- with their clout -- surely get. So, the difference is the "spread" that fletch alluded to: 24 satang for gluttinous MC, 8 satang for Visa. Do the networks share with the issuing banks? Dunno. But there's nothing you can do about that spread. Besides, you're only interested in the advertised network rate you're getting from either Visa or MC. Plus, of course, the add-on fees your issuing bank assesses (where the real nature of how expensive your plastic is materializes).

One other thing interesting, at least to Yanks. If you ACH money via Bangkok Bank NY to Thailand, you receive the Buying TT rate, less the front and back end fees. Well, for me (whose USAA account has no ACH fee), I get exactly 8 satang less than the TT rate when I send $10,000 (4 for $20,000, 18 for $2000). Thus, if I had a MC ATM/Debit card, that had no fees, nor passed on the network's ISA fee, I would be in the same boat using ACH, with $10k transactions (assuming my MC reimbursed the 150bt ATM fee, or I used Aeon). I'd be better off, however, using a fee free Visa card (which I do, with my Schwab Visa ATM/Debit card).

But few MC ATM/Debit cards are fee free (to my knowledge), nor do many reimburse ATM fees. So the ACH route for Yanks would seem superior, even for amounts below $10k.

Anyway, it pays to shop around for how to get your money to Thailand. Many of us have explored the alternatives. John has the best track record, and the best information -- at least for Yanks.

Fletch, I note you're a Brit. What's in your wallet? (Years ago Nationwide seemed to be the best deal -- right up there with Schwab. But they added fees. What's the best Brit deal today in plastic?)

[TallGuyJohninBKK]

Quoting Fletch's post above:

Your assertion that you can see and check actual rates on the website is also wrong. They are indicative only. That's why you see the same rate...

No, you're wrong, fletch. You may have to look at the next day's posted rate, for POS transactions that take a day or so to process. But, it will be amazingly right-on to the rate you receive (before, of course, any add-on fees from your issuing bank). I did this for several months last summer, using Visa and MC. The only difference I noted between the Visa and MC postings were that Visa's rate-for-the-day was posted at the very beginning of the New York working day (0001), while MC was about 12 hours later.

Indeed Jim, in my comments above on using the VISA website and their daily international exchange rate info for the Thai baht, I was thinking back to prior posts here in a different thread where a TV member detailed how transactions on one of his no-fee U.S. debit cards lined up exactly and repeatedly with the rates shown on the VISA site. Not close...not almost... not sometimes... But exactly... And, correct me if I'm wrong, but I want to say those posts came from you?

I usually have used both the Xrates.com website and the BOT daily Interbank Exchange Rate figures as my yardsticks for evaluating the exchange rate performance of my U.S. bank cards.... since those figures each weekday are expressed in Thai baht to the dollar. Whereas if I recall from your posts, with the VISA site, you have to calculate the inverse amount in order to get to the Thai baht figure... And I hate doing the math....

But I was surprised and pleased to see that info and outcome, since it gives folks another solid information point and indicator to evaluate the exchange rate performance of their bank cards.

BTW, just a comment on how U.S. banks seem to handle the disclosure of the various foreign transaction fees, and Jim's comment above about the disclosure requirements.

Indeed, because of the now settled class action ligitation over U.S. banks colluding on those fees and failing to disclose such fees in the past, the U.S. banks now do a much better job of disclosing them. But as a cardholder, and especially with any new account, it still really pays to pay attention to such things.

In my experience, that issue breaks out in two different ways...

--For the straight foreign currency transaction fees (both the % ones and some banks that also have flat $ amount per transaction ones), those do seem to get listed separately in people's online banking ledgers, at least with the U.S. banks I'm familiar with.

So for example, in the somewhat long distant past when I stupidly used my BofA debit card to make ATM withdrawals in Thailand, my online banking ledger (to my great dismay) would show three different entries for each transaction: 1] the withdrawal amount, 2] a % FCF add on, 3% at the time, I believe, and then 3] a flat amount fee that I think was $5 at the time.

--But the VISA and MC card network fees seem to get treated differently.

In the U.S. banks that I'm familiar with, nowadays, they typically do disclose the fee if it's charged in their usually obscure, small print terms and conditions document. And for the T&C documents I've read for accounts that pass along that fee to customers, the language usually reads something like, for foreign transactions, the bank will process them using the VISA (or MC) rate plus a 1% card network fee. (I've never seen any other, lesser amount listed or disclosed).

But then in the online banking or statements ledger for those accounts, the 1% card network fee, in my experience, is rarely if ever listed separately, unlike the FCF... It's usually just taken out of the net exchange rate used for the transaction.

Thus once again because of these fees, especially for new accounts or if a cardholder has never done that kind of comparison before, it really pays to compare the actual exchange rates a bank card is producing with the yardsticks mentioned above.... VISA web site, Xrates.com, and the BOT IER info... to ensure you're getting good value for your money.

And, as stated above, all other things being equal for U.S. issued bank cards, a VISA logo card is going to consistently produce a somewhat better foreign exchange rate than a MC logo card...

Edited December 14, 2011 by TallGuyJohninBKK

[TallGuyJohninBKK]

BTW, for anyone who hasn't seen the news in a separate TV thread here, the long-running class litigation case against a group of large U.S. banks and credit card companies over their past FCF practices has finally come to an end, and settlement payments are being mailed out now to cardholders who previously had joined that cased and filed claims statements.

The info on the payments finally going out to cardholders....after several years of delay after a settlement in the case had been reached, is located here:

It's too late now to join the case or file a claim now, if you didn't already do so by the past deadline. But if you had filed a claim, make sure your current address is still the same as the one used on your claim several years back. And if not, contact the claims administrator to update your address info, since the checks are being sent out by postal mail.

All totaled, some 10 million claims were filed in the case by Americans who had used their bank cards abroad (and thus incurred fees) during a decade long period ending in 2006.

[JimGant]

Just to show that the rate-of-the-day you find on the Visa website -- HERE -- is accurate, not "indicative," here's my USAA bank statement:

The dates shown are the dates of transaction. To find the FX rate on the Visa site, I had to use the following day in all situations (e.g., the King transaction of 01/03 posted using the 01/04 rate-of-the-day from the Visa site). As they say on their site:

Rates apply to the date the transaction was processed by Visa; this may differ from the actual date of the transaction.

The rates from the Visa site:

01/04:0.033277

01/07:0.033177

01/13:0.032992

01/20:0.032915

01/22:0.032743

Using King Power to illustrate for all transactions, 1900 baht was the purchase price, which was converted to dollars using the Visa rate-of-the-day of 0.033277 for posting date 01/04. This results in $63.2263, which is rounded to $63.23. So, due to rounding, the actual exchange rate is: 0.033278947. And this is what is shown.

The reported dollar figures by USAA are before any fees. Thus, this is the pure Visa network rate (and on their site I enter "0" where it asks for bank fees). USAA now isolates the 1% foreign transaction charge (see the bottom of the atch), but a few years back it was included in the total. So, you need to know how your bank handles foreign transaction fees in order to assess whether or not you're getting the rate-of-the-day.

Why would you care? Well, if you've correctly accounted for the foreign fees (if applicable) -- and you're getting a rate less than the published rate -- well, you've got hidden fees.

The MC site's rates are also accurate, at least they were when I last ran the numbers.

If you can point me to something (anything) that shows that all banks, credit card and charge issuers use the same exchange rate, then I'd be interested.

All my Visa cards use the same Visa rate-of-the-day. For some, that's my effective rate, as they don't pass on Visa's ISA fee, nor do they add any fees of their own. Obviously, however, for those issuing banks that pass-on and/or add fees of their own, it's usually all downhill from there. (I say 'usually' because a great rewards program can overcome fees in some situations.)

[endure]

Fletch, I note you're a Brit. What's in your wallet? (Years ago Nationwide seemed to be the best deal -- right up there with Schwab. But they added fees. What's the best Brit deal today in plastic?)

Strangely enough at the moment one of the best is the Halifax Clarity credit card. No foreign transaction fees even on ATM withdrawals, 12.9% interest rate if you have a reasonable credit ratings and near enough interbank exchange rates. I drew 120,000Bt in cash over 3 weeks in November and it cost me a total of £3.28 in interest. I withdrew cash, let it appear in my CC account and then paid it straightaway. I was only charged interest for the time the debt was on the account.

[CaptHaddock]

Thanks for the comment, Captain...

Who do you like for no foreign currency fee credit cards?

We use Penfed Promise Visa (no annual charge, late charge!, or foreign currency charge) and the US HSBC MasterCard. PenFed, in particular, is a good organization.