Credit card FX fees report
The WSJ is out with a report on American Express credit cards suggesting that business clients were recruited with the promise of cheap FX conversion rates, only to see them raised later without notice.
"The practice, widespread within the forex department, was occurring until early this year and dates back to at least 2004, the people said," according to the report.
The problem with physical FX is that you have two things -- the spread and the commission -- and you can sell clients on 'no commission' and charge a 300 pip spread. That's extremely slimy.
"Salespeople would often tell potential clients that AmEx would beat the price they were paying banks or other financial institutions to convert currency and send money abroad. The salespeople didn't inform customers that the margin, a markup that AmEx tacks on to the base currency exchange rate, was subject to increase without notice, they said," the report said.
But physical FX is a snakepit at every level. A big issue is that consumers (and businesses) are woefully uneducated and it makes them targets for being ripped off. I mean, how uses a credit card for foreign exchange?
Shares of AXP are down 1.2% in the premarket and the story comes just as it looked to be breaking out.
