Yet Again, Not Happy With Captial One

Several months ago my wife and I quit going to Oh-Sushi, our then-favorite restaurant for Sushi. The reason we quit going wasn’t the food, but the fact that every time I used my Capital One card, I was being charged in U.S. Dollars (at a really bad exchange rate) rather than being charged in Polish Zloty.

They claimed that the machine processed the transaction automatically and there was nothing they could do about it. While I would have liked to believe them, I never had a problem before – so I wrote about it and we just stopped going to that restaurant. We found another Sushi place that took my Capital One card and always charged me in PLN rather than USD.

I was ready to write it off as an uncooperative merchant, but recently I went with a big group of people to another restaurant in Wilanow called Castello’s. I paid for the whole bill with my Capital One card and imagine my shock when I went to sign for eh card and noticed that they had already converted the Exchange rate for me into USD – at a really terrible rate (3.25 vs. the rate of the day which was closer to 3.75).

I was a bit livid and tore into the guy for charging me in USD. He insisted (and I believe him) that the machine automatically calculated the amount, probably based on the fact it was a US Dollar-based credit card.

I started to see a pattern. So I went back to Castello's this past weekend and paid with my shiny new Charles Schwab card. There was no problem paying in Polish Zloty and I got the fair exchange rate and presumably I will get back the full 2% back in cash rebates.

I cannot find anything about this online, but it looks to me that Capital One and Polcard have an agreement that in some establishments (possibly limited to certain restaurants), the credit card will be charged in the base currency of card. Polcard makes a substantial profit from the crappy exchange rate, and I assume that somehow there is an incentive for Capital One because they do not charge a foreign currency transaction fee.

This is yet another reason to ditch my Capital One card. I unfairly blamed the restaurants, but now I see this is definitely a problem with the credit card company – specifically Capital One.

My advice - If you do use a Capital One card overseas - carefully monitor how you are being charged. If ever given the option select the local currency, and if not given the option - use another credit card.

My Take on the Charles Schwab Visa

Not too long ago I wrote about the new (at least new for me) Charles Schwab Bank Visa Card. It's two biggest advantages are that it does not charge that evil foreign currency transaction fee, and it will pay you 2% back on all purchases.

Right after I wrote about it - I applied for one. I couldn't resist.

Here's what I found:

-I applied for the card over the internet, but it told me that they would have to review my application and get back to me. I thought that was a nice way of saying that I had been declined, but a couple of weeks later I did get a shiny new card in the mail.

-8 months ago Capital One issued me a card with a ridiculously low credit limit. I feared that this was a reflection on my credit rating. It turns out Capital One just sucks - Charles Schwab gave me a credit limit 7 1/2 times that of what Capital One gave me no questions asked.

-When I got the card, I made multiple calls and the people on the other end were sooo friendly! They answered every question they could to my utmost satisfaction. One lady even recognized that I had called earlier. That was actually a nice touch.

-The interest rate is pretty high compared to other cards that I have, but I don't plan to carry a balance. They don't have any annual fees, and did I mention that they don't charge the foreign currency transaction fee?!?

My only disappointment came the first night when I was trying to sync with MS Money. When I was checking out the card I read on their website: "Users of Intuit's Quicken or Microsoft's Money can quickly download their Schwab Bank account information to their computers for more convenient management of their finances."

When I called and asked why I couldn't get my software to sync, the dude on the other end told me that I could only download once a month after the statement cycled through.

You have got to be kidding me...

This little detail is the only problem, that I have with the bank. This is extraordinarily painful to those of us that use MS Money as a part of our financial management - especially those of us who use different currencies where we don't know the exact amount charged until after it posts to our accounts.

The other side of the coin to this is that you have to sign up for a Charles Schwab Brokerage account to hold the 2% rebate. This process was a tad laborious and a just little bit painful. The folks on the brokerage side are not as friendly as the banking folks and going through the process is just too time consuming. Luckily, the brokerage side of the house is compatible with MS Money.

So aside from the really disappointing news that I have to enter my own transactions, this is going to be our card of choice. 2% back and no transaction fee is just awesome, and the fact that the money is returned monthly is just gravy. So far it looks like their exchange rate is at least as fair (if not slightly more-so) than other cards - so for now - this is the only one I use.

Still Looking for the Perfect Card

So at the bar the other night I met a very nice lady who told me about her Bank of America, Military Bank credit card that did not charge any foreign currency transaction fees.

Too good to be true I thought.

So I went to BOA's web site, and they did have a web site for military banking - but when I clicked on the terms and conditions of the credit card, their web site was non-operational and said I should call their 800-number. (The fact that their web sit was not working should have probably alerted me this was not going to easy).

So I called. The woman said "I have a great offer for you" and proceeded to offer me a card with 3% foreign currency transaction fee.

I thanked her and tried to hang up, but then she persisted and asked specifically what I was looking for. When I said I wanted a card that did not charge a foreign currency fee, she put me on hold for a couple of minutes more.

When she came back she told me "I have another great offer for you". Apparently Bank of America is full of great offers.

This offer I thought was very interesting - She offered me a "Bank Of America Military Preferred American Express" and insisted this card only carries a 1% foreign currency transaction fee.

There is no cash-back program with this card (only points that I'd never use) but the interesting part was this is the only American Express card I've ever heard of that charges only 1% for purchases in a different currency. Usually it's between 2.7 and 3% depending on the issuing bank.

I find this encouraging, because frankly I think this fee should be abolished. Visa, MasterCard and American Express already make a decent profit on every transaction charged to the vendor - there is no reason to bill the card member / traveler again for the same purchase.

There are banks that don't charge these fees. I'd just really like to see more of them.

Lucky Ducky

I have been assigned yet another label in my life - This time I'm not sure if it's flattering or not.

Apparently I'm a Lucky Ducky. The term in the financial world apparently refers to people who do have income, but are able to take advantage of incentives and tax credits in order to have zero taxable income; therefore, actually end up making money off of the income tax system.

Reading through a few sites, I see that many see this as an unfair situation. I happen to know quite a few young military families that have directly benefited from the tax cuts responsible for producing so many Lucky Duckies...

So say what you want - it's just water off a duck's back.

More Options in the Pursuit of Avoiding the Foreign Currency Fee

I've got my USAA MasterCard - Back when life was simple, that's all I thought I'd ever need.

Last week I was happy to brag that I found a new Credit Card that not only did not charge foreign currency transaction fees, but also gave you 2% cash back.

Well there's at least a third credit card that doesn't charge the fees. It's an HSBC Premier World MasterCard. The bad news- I've hear horror stories about HSBC and I don't see any other benefits in owning the card.

But I am on a crusade against this fee, and I'm really looking for a card with no hassles that allows me to buy things in Poland, the same way I buy them in the U.S. - without being penalized for it.

And by the way - AAA used to offer a Visa with no foreign currency transaction fees, but apparently starting 1 June 2009, they are going to start 2%. The search continues...

UPDATE: Apparently you have to maintain a $100,000 balance with HSBC to keep the premier status. Pass on this card after all - it's a dog.

Wonderful Warranties

I've been posting a lot about warranties lately, and I started making a mental list of the things that I've had serviced (or even replaced) under the manufacturer's warranty. The list started getting long.

These are some of my most recent warranty experiences:

-Kind of expensive surge protector - Mailed it in to get replaced

-Bose Earphones - Mailed in to get replaced

-iPod Touch - Took to the local Apple Serwis Shop where it was deemed to need replacement

-Wireless Keyboard - replaced free of charge by the store

-Memory Stick - replaced free of charge by the manufacturer

-Western Digital Hard Drive (2 times) - Replaced no questions asked by the Manufacturer

-Dell Computer - Had it serviced here in Poland - under warranty - no questions asked.

-Christmas gifts - One replaced by the website that sold it (no questions asked) and one that was a little more painful - but they still replaced it.

-Cast Iron Frying Pan - Bought 18 months ago and it cracked. The manufacturer sent a new one with no questions asked.

All-in-all we've had excellent luck lately with getting things serviced under warranty. Almost zero complaints. Now it might help when I'm contacting these places I explain that I'm stationed overseas and that I need assistance from afar, but whatever - I have a lot more faith that I'm getting my money's worth for the things I buy.

Of course the question becomes - what happens when the new/fixed items break again... I guess I'll end up doing exactly what the manufacturers hope that I do - buy new ones...

Capital One Kind of Sucks

This has me over the edge -

Not too long ago I wrote about my experiences with Capital One here and here.

In January I asked for a higher credit limit on my newly acquired card because my initial limit is painfully low. I was denied a second time for an increase and this is the text of the letter they sent me explaining why:

"Thank you for your recent request to increase your credit limit. We regret that we cannot approve the requested change. The reason(s) for our decision are as follows:

Insufficient length of Capital One relationship

The profitability of your account at your current purchase rate

Your Capital One account is too new "

The first and last bullet are the same thing essentially - I haven't been a customer long enough. I have been a customer for six months though - and faithfully paid my bill in full every time, but I could almost concede that point.

But to deny me because of profitability of my account at my current purchase rate!?! What does that mean?

These are the only things that I can even guess:

1. I charge (modestly lately) on my account and pay it off every month. I never carry a balance.

2. I did request Capital One's "Military Rate" which allows me a substantially lower interest rate and waives several fees - but I never take advantage because I pay it off every month. Even their military rate is higher than the regular interest rate that USAA gives me so if I ever need to carry a balance - it won't be on this card.

3. Because I use it overseas, and Capital One is the only card issuer that doesn't charge a foreign transaction fee, they feel like I'm taking advantage of them and don't want to give me the chance to spend more of their money.

Regardless of the reason - this is ridiculous. I seriously considered canceling the card, but instead, I've decided to maximize the damage I can do.

Since they give me back 2% on gas and grocery purchases and they don't charge that foreign currency transaction fee, I will use this card to purchase only gas and groceries - and only overseas. I will continue to pay it off every month and I will cash out on the cash rewards as soon as humanly possible. Possibly monthly with the way we go through gas and groceries.

The downside is that charging near the top of your spending limit (and in this case that is pretty easy to do) is actually bad for your credit score. But I'm not planning on making any major purchases in the next few months so I think I'll be okay. With the current exchange rate against the zloty - their meager exchange rate is probably enough for just our gas and groceries.

I think I'll be much happier with sticking it to Capital One (vice jsut cancelling the card) until they up my limit. I say beat 'em at their own game.

And of course the story is not over. I've sent a letter to Capital One under the Fair Credit Reporting Act, asking them to clarify the reasons for denial. I've specifically asked if the account is not profitable because I don't carry a balance or because of the low interest rate. I'll post any updates as I get them.