Cashing Travellers checks in USA

In message Robin Stober
was claimed to have wrote:

Hatunen wrote:
On Tue, 01 Dec 2009 15:58:22 -0800, SMS wrote:

I'm sure
Capital 1 has figured that they make more money in interest and merchant
fees from gaining more card holders than they lose from not charging the
foreign transaction fees.

I'd like to see some sort of evidence that is true.

The fact that it's true is rather its own evidence. Financial
institutions make decisions to maximize their profit. It might not be
the right decision (in the sense that it doesn't actually maximize their
profit), but I think there's no doubt that Capital One analyzed the
possibilities and decided on this scenario because they thought it would
provide the most revenue. In other words, they didn't decide to just be
nice to travelers who were doing currency conversions.

"Being nice" is sometimes the best financial move too.

Even if bank isn't directly coming out ahead by eliminating foreign
transaction fees, they might have found that their customers are willing
to go elsewhere to get a better deal on this particular issue, so it's
worth taking the loss on the individual transactions to retain those
customers.

DevilsPGD wrote:

Even if bank isn't directly coming out ahead by eliminating foreign
transaction fees, they might have found that their customers are willing
to go elsewhere to get a better deal on this particular issue, so it's
worth taking the loss on the individual transactions to retain those
customers.

Well stated.

People look at interest rates (at least those foolish enough to carry a
balance) and rewards and fees when selecting a credit card. Since most
card holders only occasionally use their cards outside the U.S., the
revenue Capital 1 and Schwab are giving up by foregoing their own
foreign transaction fees (and ponying up for the fees charged by
MC/Visa) isn't a heck of a lot compared to the other revenue they're
getting from card holders. It's a good marketing strategy that the
larger card issuers don't want to follow, and since so few card holders
understand this whole issue and/or are aware of ways around it, the
larger card issuers are pretty safe.

I wonder how long Schwab can continue their 2% cash back. Countrywide
did 2% for about a year before they dropped it.