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News Analysis: The Great International Credit Card Settlement

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Credit Cards Foreign FeesAs Peter mentioned on his radio show last weekend, if you’ve used a credit or debit card or made an ATM withdrawal outside of the U.S. between February 1, 1996 and November 8, 2006, you’re about to be at least $25 richer.

You may have missed the news last year when a class-action suit against the credit-card companies wound up in the consumers’ favor.

Credit cards branded by Visa, MasterCard and Diners Club and their partner banks were accused of overcharging for “foreign transaction fees,” conspiring to withhold that information from its cardholders, and even inflating the exchange rate. The lawsuit contends that the hidden fees actually generated the credit-card companies and banks more than $3.5 billion.

We spoke with Visa and MasterCard, who acknowledged that they charge a 1 percent fee to convert your purchase to U.S. currency, and the issuing banks add on another percentage (usually about 2 percent) on top of that.

Some banks, such as Wells Fargo, will even tack on a hefty flat fee of up to $5 when you withdraw money from an ATM. The result? A series of jaw-dropping charges on your credit-card or bank statement.

The companies settled for a whopping $336 million, which means that about 30 million people nationwide are receiving notices that they are eligible for a refund.

There are three refund options to choose from:

  1. The Easy Refund of $25, which is a one-time, flat fee. This is recommended if you traveled outside of the U.S. for less than a week, or had foreign transactions of less than $2,500 using the cards named in the lawsuit.
  2. Your second option is a Total Estimation Refund based on “typical spending during travel,” and is recommended for those who traveled outside of the U.S. for more than a week or spent more than $2,500.
  3. Option three is the Annual Estimated Refund option, which is recommended if you travel extensively and can provide information broken down by year.

Refunds will be assessed by the court, and according to multiple reports, the plaintiff’s attorney Bonnie Sweeney has stated that, exclusive of the $25 flat return, the refunds could range from 1 percent to 3 percent of your total transactions.

Take note, if you’re filing for the third option, you’ll have to supply your credit-card information. (Some media outlets are even reporting on consumers who think that this notice is a scam.)

The defendants include Visa, MasterCard, Diners Club, Bank of America, Bank One/First USA, Chase, Citibank, MBNA, HSBC/Household, and Washington Mutual/Providian. If you think you’re eligible for a refund, visit www.ccfsettlement.com or call 800-945-9890 to file a claim. The deadline for filing a claim recently was extended to May 30, 2008.

By Managing Editor Sarika Chawla for PeterGreenberg.com

Related links: CCF Settlement, Consumerist, The New York Times, WQAD

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