A few of my friends pointed out recently that Citibank is being a bit deceptive when charging foreign transaction fees.

Most credit cards charge a 3-4% fee for purchases in a foreign currency. Citibank appears to be charging these fees for all purchases that are processed outside of the US, even if the charge is processed in US dollars. This means that it’s not the currency that matters, but rather where the merchant is located.

Also, watch out for airline purchases from online travel agencies such as Expedia or Orbitz if you are purchasing a ticket from a non-US carrier. Online travel agencies will generally pass your credit card information along to the airline to charge your ticket. As an example, if you’re purchasing a ticket from Lufthansa through Orbitz, it will actually be Lufthansa charging your card. Even though the charge may be in US dollars, you may still be subjected to a foreign transaction fee.

The good news is that my friends (and many others online) have been successful in disputing these fees. If you make a purchase in US dollars that appears to be from a company in the United States, but are charged a foreign transaction fee, you may have luck calling Citibank and asking them to reverse this fee.