I like AAA, and I think every American driver should join. Over the years I’ve gotten help from AAA for flat tires, dead batteries and keys locked inside the car. And I’ve saved a lot of money on hotels all over the country. So I was really surprised when AAA gave me a raw deal on a prepaid credit card.
The AAA Visa TravelMoney prepaid card seemed like a great idea when the husband and I were planning a three-week trip to Russia and Scandinavia last year. We could load the card up with our own cash and use it like a debit card on our trip. If it was lost or stolen, AAA would replace it. And we wouldn’t expose our own credit cards to theft or fraud.
Here’s how AAA promotes these cards: www.aaa.com/prepaidcards
Looks good, right? So I went to my AAA office and bought a card for $4.95 and a second card on the same account for $2. And I gave AAA $1,500 to load onto the card. It wasn’t until later, when the husband read the fine print in the pamphlet that came with the cards, that I found out the cards charged an outrageous foreign transaction fee.
Here’s the fine print:
Foreign Exchange: If a card transaction is made in a currency other than that loaded on the Card, the amount will be converted into the appropriate currency at an exchange rate on the day the transaction is processed. The exchange rate used is the wholesale money market or the government-mandated rate increased by 7% (including the VISA handling charge of 1%).
Seven percent? It’s beyond outrageous. It’s usurious.
I brought our cards back to the AAA office, where I got a full and courteous refund of my $1,500 and the fees. Even so, I told the AAA representative that I was angry about the 7 percent fee, which had not been disclosed to me. I admitted that I hadn’t read the fine print, but I told her that I never would have expected a respected organization like AAA to be involved in such a consumer-unfriendly deal.
The AAA representative told me that the 7 percent charge should have been mentioned when I bought the cards, but that it was not out of line with what regular credit cards charge. And she said the extra protection and peace of mind might be worth it to some customers.
I disagree. My two credit cards charge 2 percent and 3 percent on foreign currency transactions, and some cards charge only 1 percent.
I guess some people might want to use these prepaid cards in the United States, where the 7 percent fee does not apply. But there are many other, smaller fees attached to these cards. If you’re thinking about getting one, I suggest you read all the fine print.
If you want to know more, generally, about getting the best deal on credit card foreign exchange rates, Rick Steves has a nice, concise article.
And if you are a loyal AAA member, as I am, please ask AAA not to abuse its members with predatory exchange rates.