Credit Card Users Win Cash

A lawsuit settlement will mean a payday for millions who used their cards for foreign transactions.

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Tens of millions of credit card users received letters in the mail over the past couple of months informing them that they may be eligible for a refund of the currency conversion fees paid during overseas transactions. The settlement was the result of a lawsuit alleging that Visa, MasterCard, and Diners Club did not disclose the 1 to 3 percent fees they charged on foreign transactions.

The paperwork, though, can be somewhat confusing. Some recipients even suspected the mailing was fraudulent. To help you figure it out, here are answers to some common questions about the lawsuit.

Does the settlement affect me?

If you used a Visa, MasterCard, or Diners Club credit card to make a foreign transaction between Feb. 1, 1996, and Nov. 8, 2006, then you may be eligible for part of the payout. You need not have traveled abroad during that time: Cardholders who made purchases from overseas companies in foreign currencies are also eligible. You may be eligible even if you did not receive a notice in the mail; visit the settlement's website for more information. How much money can I get?

Those who qualify for a refund have three options: 1) Fill out minimal paperwork to receive $25, which is recommended for those who traveled abroad for less than a week.

2) Answer questions about your travel abroad for a refund based on typical spending levels, which is recommended for those who traveled abroad longer than a week or spent over $2,500 on one of the eligible cards.

3) Provide detailed information about your spending to receive a refund based on those expenditures, which is recommended for those with extensive overseas travel.

Even if you did travel extensively, you may choose the easy $25 refund to avoid the extra paperwork. Regardless of the option selected, the deadline is May 30, 2008. Merrill Davidoff, one of the lead attorneys on the case, says more than 5 million claims have already been made.

How much are the lawyers getting paid?

According to the settlement's website, they will request $86 million, as well as reimbursement of their expenses. The total value of the settlement fund for refunds, lawyers' fees, and other costs is $336 million. Do the credit card companies still charge foreign transaction fees?

Yes, but now they tend to be better disclosed, Davidoff says. "When we started [this case] seven years ago, they were completely hidden, and consumers were largely unaware. Now, they are spelled out," he says. Still, the fee can range from 0 to 3 percent, so he recommends shopping around. More information on being money savvy while traveling abroad is in "The Best Ways to Get Cash While Overseas."

• You can check out the most recent Carnival of Personal Finance at We're in Debt.