Best credit card for use in USA
Discussion
KTF said:
Halifax clarity gets the MasterCard rate which follows the rate on xe.com. How is that a bad deal based on your description?
It doesn't really give enough information. You need to get a two way quote from them and contrast it to the real market before you can ever know what the real cost is to you. The question to always ask is what mechanism of governance is in place to force a retail bank to quote accurately around the clearing rates? There's no regulation, they often farm it out to separate entities to absolve themselves and clients usually tell them what side of the market they are.
My first question when I read your post was what does 'follow' mean in this instance? It's a wonderfully misleading term in marketing as it implies 'matching' but obviously you can 'follow' something at a very wide and inconsistent distance so in reality the term is valueless.
If it matches then you need to look at how XE's quotes are derived.
The key here is that anyone dealing in physical fx should do so with their eyes wide open as it is an unregulated market which means there are no actual rules as to what the vendor can do. And terms like 'comm free' are a marketing scam is it just means the comm has been wrapped into the spread to help mask how enormous it is. Hiding the comm like that is step one in tipping eyeballs out and why it isn't allowed in the regulated markets.
Based on the rates quoted here:
https://www.mastercard.com/global/currencyconversi...
The rate for euro is 1.271926 (xe.com 1.27507)
The rate for usd is 1.457501 (xe.com 1.46349)
So there is a slight difference in the rates but it is still better than conventional credit cards that add foreign currency fees, etc on top.
Sure if you were doing a lot of transactions a bank account in that currency may be better.
https://www.mastercard.com/global/currencyconversi...
The rate for euro is 1.271926 (xe.com 1.27507)
The rate for usd is 1.457501 (xe.com 1.46349)
So there is a slight difference in the rates but it is still better than conventional credit cards that add foreign currency fees, etc on top.
Sure if you were doing a lot of transactions a bank account in that currency may be better.
What's the spread though? Unless you know that and also hoe much it deviates from the true market then you've no actual idea whether it is better.
That's the whole key here. There is no regulater to enforce any form or true practice and most customers have no idea how it works so simple marketing ruses work wonders.
The price you quoted could be better than an institutional rate but the reality is that without the key information you have absolutely no idea what price you are really paying.
That's the whole key here. There is no regulater to enforce any form or true practice and most customers have no idea how it works so simple marketing ruses work wonders.
The price you quoted could be better than an institutional rate but the reality is that without the key information you have absolutely no idea what price you are really paying.
boxst said:
I agree with you, but for the casual person who goes abroad rather than trades in currencies the cards mentioned are much better than other mainstay credit cards on the market.
I would tend to agree but how would you prove it? 
. That's a serious question, can you prove that they are cheaper?The reason I'm inclined to agree is based on the gamble of reputational risk and that a more recognised public brand will wish to scam retail consumers less than others because the cost of caught is higher but other than that you would have to execute a series of trades at different desks all at the same time and compare to the true market to actually get any data. And you'd have to do it repeatedly. Given that almost certainly no one ever will then the scope for casual customer fisting is just too tempting.
DonkeyApple said:
I would tend to agree but how would you prove it? . That's a serious question, can you prove that they are cheaper?
The reason I'm inclined to agree is based on the gamble of reputational risk and that a more recognised public brand will wish to scam retail consumers less than others because the cost of caught is higher but other than that you would have to execute a series of trades at different desks all at the same time and compare to the true market to actually get any data. And you'd have to do it repeatedly. Given that almost certainly no one ever will then the scope for casual customer fisting is just too tempting.
I travel quite a lot, and some places are fussy about the cards they take. So I often have transactions on the same day using different cards. The only ones I have are an MBNA and a Halifax card. With those transactions on random days over a period of a few months the MBNA card was consistently around 6% more expensive than the Halifax card. That's as close as it gets to my investigative powers . That's a serious question, can you prove that they are cheaper?The reason I'm inclined to agree is based on the gamble of reputational risk and that a more recognised public brand will wish to scam retail consumers less than others because the cost of caught is higher but other than that you would have to execute a series of trades at different desks all at the same time and compare to the true market to actually get any data. And you'd have to do it repeatedly. Given that almost certainly no one ever will then the scope for casual customer fisting is just too tempting.
DonkeyApple said:
It's just another current account. They take moments to set up.
And 1.45 is meaningless as its a 5 digit quote and the key as to cost lies in those last two digits.
You need to quote the two way spread from both your bank and the underlying market simultaneously to know whether it is a good deal. And I bet you it wasn't. Hence the freebies to sweeten the deal.
Maybe I'm being a bit thick here, but how is 1.45 meaningless? That was the exchange rate used and it seems comparable to what I would have got elsewhere. Please tell me about the '5 digit code' and how that could have reduced the cost. And 1.45 is meaningless as its a 5 digit quote and the key as to cost lies in those last two digits.
You need to quote the two way spread from both your bank and the underlying market simultaneously to know whether it is a good deal. And I bet you it wasn't. Hence the freebies to sweeten the deal.
bad company said:
Maybe I'm being a bit thick here, but how is 1.45 meaningless? That was the exchange rate used and it seems comparable to what I would have got elsewhere. Please tell me about the '5 digit code' and how that could have reduced the cost.
The exchange rate isn't a single price. It's two prices, one is the buying price and the other the selling. The gap between the two is called the spread. It's into the spread that you hide your real charges. So, the spread for gbp/usd on electronic transfers is around 1 point which is 0.0001 so you can see why a rate of 1.45 doesn't mean much as the rate should be quoted to 4 decimal points. The last two points are where the action is so a company not quoting to that level would be a bit of a warning.
Physical fx costs more to deliver than electronic so it does cost much more than 1 point. I think I'm right in saying that the typical spread for Cable is 10-40 points. Many of these retail operators charge spreads as wide as 300 points or more.
But that isn't the whole issue. He can still quote you what looks like a really tight spread but his bid and offer are massively skewed to one side. So the deal looks amazingly cheap but you are still paying 300 odd points over the market rate. There is no law or rules that the fx broker has to quote you any kind of price near the market. He can in fact quite anything he likes. So if you go to a broker and tell him you want to buy usd then you are telling him which side of the trade you are going, which what almost everyone does, then he can hit you quite hard if he wants to.
I've seen it on PH where someone has posted that they got a fantastically tight spread from one of the fx brokers but the broker has been one of the ones known to skew the whole bid and offer to look cheap but actually be hugely expensive.
Then, to cap it all, there is no actual fx exchange unlike with equities or commodities. The market price is derived by banks amalgamating multiple quotes from a selection of banks and that is another weakness for the retail buyer.
Buying currency is the exact equivalent of entering into a cash deal with the most bent, illegal, violent, dodgy bloke in the most dodgy pub that you know. Except the nature of the business is hidden by having a fancy office and blokes from the East End who have had elocution lessons.
I'm probably rambling as I'm currently trapped with two hyperactive offspring but hopefully it makes some sense.
I take your point DonkeyApple but all I wanted to do was for something in the USA. If I had done it your way would I would have saved very much?
Having said all that I probably spend around $10,000 per annum in the USA or with American firms so perhaps a dollar bank account could be beneficial.
Having said all that I probably spend around $10,000 per annum in the USA or with American firms so perhaps a dollar bank account could be beneficial.
bad company said:
I take your point DonkeyApple but all I wanted to do was for something in the USA. If I had done it your way would I would have saved very much?
Having said all that I probably spend around $10,000 per annum in the USA or with American firms so perhaps a dollar bank account could be beneficial.
It really does depend on how much you are buying and how much you care. I'd say that it's very easy to get taken for as much as 10% by some cards and 5% doesn't seem uncommon. Having said all that I probably spend around $10,000 per annum in the USA or with American firms so perhaps a dollar bank account could be beneficial.
I'd reckon that 1% comm should be a good target and based around the true market bid and offer. Everyone's different and I am definitely far more sensitive than most as I catagorically don't wish to pay huge sums to a corner of my industry I have no respect for but I genuinely don't think that most people realise just how much money they are paying.
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