I travel. I have travelled recently to Singapore and the Philippines a couple of times. I have used ATMs against my debit card to draw cash whilst overseas. The Commonwealth Bank of Australia (CBA) has finally managed to bamboozle me on the fees until I sat down and worked it all out.
The first thing I should say is that I spent about an hour on the CBA website (http://www.commbank.com.au/) looking to find out how these fees are calculated. Unsuccessful. So, firstly, a summary of the transactions:
|Location||Date||Bank||Foreign Currency||Aussie Dollar Equivalent||Fee Charged||% Charge|
|Singapore||11 Oct 2010||DBS Bank||SGD 200||163.69||5.00||3.05%|
|Singapore||18 Oct 2010||ANZ Singapore||SGD 100||78.03||7.34||9.41%|
|Singapore||25 Oct 2010||HSBC Changi||SGD 200||157.67||9.73||6.17%|
|Singapore||1 Nov 2010||OCBC Singapore||SGD 100||79.18||7.38||9.32%|
|Manila||13 Oct 2010||BDO||PHP 8200||191.94||10.76||5.61%|
I’ll admit it, I am was perplexed at this point. There does not seem to be any consistency in the charges – well, except for the ANZ and OCBC charges in Singapore. As they were so similar, there needed to be some type of consistency. The CBA is, after all, a bank and does not do inconsistency well.
I decided to make a guess and assume (yes, I know, always a risky business) that the charge is a combination of a fixed and floating percentage. So, if I guess a little and say the charge is AU $5.00 per transaction plus 3% of the transaction amount in Aussie dollars then that gives me the following:
- ANZ – $78.08 – fee calculation is therefore $5+(78.03×3%) = $7.34
- OCBC – $79.18 – fee calculation is therefore $5+(79.18×3%) = $7.38
So far so good. Now let’s apply this calculation to the rest of the table:
|Location||Date||Bank||Aussie Dollar Equivalent||Fee Charged||Fee Calculated||Difference|
|Singapore||11 Oct 2010||DBS Bank||163.69||5.00||9.91||-4.91|
|Singapore||18 Oct 2010||ANZ Singapore||78.03||7.34||7.34||0|
|Singapore||25 Oct 2010||HSBC Changi||157.67||9.73||9.73||0|
|Singapore||1 Nov 2010||OCBC Singapore||79.18||7.38||7.38||0|
|Manila||13 Oct 2010||BDO||191.94||10.76||10.76||0|
Looking better and now somewhat understandable. However, the DBS Bank at the top of the table still had me flummoxed. It seems as though the bank had forgotten to charge the 3% variable part of the fee. Forgotten? I don’t think so. Perhaps it was an arrangement between the two banks and therefore I should look for DBS ATMs in future? Or perhaps all is not what it seems!
I remembered that for that withdrawal one of the options at the DBS ATM was to do the transaction conversion from Singapore dollars to Aussie dollars at the ATM itself and I had said yes. In that case, it must be that the foreign transaction fee charged is just a flat $5.00.
So, is the bank getting at me? Yep. sure is. On 18 October, the mid rates between Aussie and Sing Dollars were around 0.795. On 11 October they were around 0.775. The rate for conversion on those two dates was, respectively, .07803 and 0.81845. This means that there was a foreign exchange premium added to that 11 October 2010 transaction. Effectively, it meant that the total fee I was paying by doing the exchange conversion on the back of the transaction was $11.69 ($6.69 on exchange rate premium plus the $5.00 fee).
Of course, had I let this process normally, and not taken advantage of the exchange conversion at the time of the transaction, then I would have paid a fee of only $9.68, effectively saving myself $2.28.
Well, now I understand the way these fees work and I suspect you do to. Moral of the story – when the bank offers you a nice service that looks like it will save you money it will likely cost you more – it’s just that you will not be easily able to see where the costs occur. Next trip I think I will take cash out in Australia and convert that to foreign cash the old fashioned way at the bureau de change in the country of arrival – let’s see how that goes.