You should never, ever, have a merchant convert local currency to $$ for you, particularly when using a credit card. They are not doing it for your benefit, and you will pay a nice premium. The only exception is when the merchant offers you a discount if you pay with US$ currency (which is common in third world countries that have currency controls or inflation problems).

The WSJ story should - at least for now - put to rest all of the rumors and misinformation concerning Capital One. Until we hear otherwise, the 1% forex fee on CapOne cards is the best of the major issuers. And CapOne generally has more lenient credit standards, so most people should be able to qualify for one of their cards.