Why Do Credit Card Companies Waive Foreign Transaction Fees?

Source: Gary Leff - View from the Wing

At some level this may seem obvious, but it was still interesting to me. It turns out that credit card companies waive foreign transaction fees on select products for the same reason they offer mileage bonuses even when those bonus offers come at a loss.

It’s all about influencing consumer behavior beyond the individual transaction that benefit from the bonus or the elimination of a fee.

American Express isn’t making money when it gives out 3 points per dollar on airfare with its Premier Rewards Gold product. Citi never made money offering 5% back on drugstore purchases.

The idea ...

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