Dynamic Currency Conversion

[candrew]

My apologies if this is not in any way new information.

Today marks the first time I've encountered the term Dynamic Currency Conversion by name. This occurred while making an airline reservation directly with an airline's online website. At the final payment step, an ominous message was displayed letting me know that they would "guarantee" the exchange rate (from Moroccan dirhams ->USD) by using Dynamic Currency Conversion. The problem is that I'd be guaranteed to pay 8% more than the current live exchange rate. Of course we declined and instead paid in the local currency that our Barclay credit card will convert for us.

Here is an article about Dynamic Currency Conversion and why it should be avoided. In addition to making sure one uses a credit card for overseas purchases that does not incur foreign transaction fees, the other piece of advice the article offers is "when you’re traveling internationally and find a merchant who offers to convert your bill to your home currency, politely decline."

https://thepointsguy.com/2015/06/dynamic-currency-conversion/

 

[6miths]

This 'scam' has been around for quite along time. Even before credit cards but made universal by Visa/MC/Amex as yet another way to make money. Free enterprise at work - buyer beware and all that. An uninformed customer is our best customer. Airline will be taking a cut of course.

 

[brett]

We always want to be billed in local currency. Our Visa does not add the usual 2.5 admin fee.

On our last few visits to Florida we found that more and more stores were asking us if we wanted to be billed in our home currency. It is easy to say yes without thinking about it. Problem is, if you say yes you will be paying a premium exchange rate as our friends found out to their chagrin.

 

[BigNick]

I made two credit card purchases of around $30 in Switzerland earlier this week. The machine asked me if I wanted to pay in CHF or EUR. Normally I always select local currency, but I decided to try an experiment, so I made the second payment in EUR. I just looked at what got debited from my account and it was pretty much the same amount. This was with a card that I don't use all that often, so I will check again with my main bank at some future point.

 

[NYEXPAT]

I live in a dual currency country and unless it is a major purchase, I just pay in the local currency. I change dollars into local currency about twice a week depending on exchange rate. Many places display the exchange rate so I carry both currencies and use whichever is better. In expensive restaurants, I always ask what the exchange rate is in order to get a better deal if the owner needs Dollars. Airline tickets I just find the best deal online and go to there office with cash in whatever currency they are quoting.

 

[candrew]

I live in a dual currency country and unless it is a major purchase, I just pay in the local currency. I change dollars into local currency about twice a week depending on exchange rate. Many places display the exchange rate so I carry both currencies and use whichever is better. In expensive restaurants, I always ask what the exchange rate is in order to get a better deal if the owner needs Dollars. Airline tickets I just find the best deal online and go to there office with cash in whatever currency they are quoting.

I hear ya'. DW & I have been living in Costa Rica since early January. We've found it best in this locale to always pay in local Colones. The x-rate during this year has floated around 560₡/US dollar. I've seen a number gringo turistas paying local vendors in $US and some merchants - ostensibly for convenience sake - xchanging at 500₡! I've been tempted several times to pull those folks aside and gently remind them that they're losing upward of 11% on the exchange.

Back to my original post on the airline tickets - the purchase has already posted on my CC account. By paying in local Moroccan dirhams rather than agreeing to allow the airline to exchange into USD at their online payment portal, I saved 8%.

 

[brett]

Our experience is that the US airlines, AA in particular, has on several occasions provided us with a very attractive exchange rate. Not certain why this is so but on more than one buy it was very much to our advantage to have them covert the USD fare to our home currency prior to putting the fare through our credit card.

We made the mistake once of falling for the exchange scam at a Florida store. It was only a small purchase but it came across at a premium of aprox 5 percent. I can see why the retailer wants to do it. Five percent margin for simply having the cashier ask a question!