Merchant currency conversion?
 

On a recent trip to London, the inevitable question hit me by one of the counter staff at Harrods while trying to use my Chairman card....

"Would you like to pay in Sterling or dollars, sir?"

Is there a right answer? Or does one need to keep up with the current bank rate+fee, vs. the rate the merchant is charging for the conversion.

Be careful -- if your card charges a foreign transaction fee (the latest scam of charging where no service is provided), they'll hit you with the 3% whether you have a currency conversion or not.

Pretty sure you want to bill it in pounds - the store's conversion rate is likely higher than the credit card company's, and the creditcard company is likely going to hit you with 2-3% fee either way (as said in the previous post). I've also had cases where when you charge it in $, the store charges you a fee in addition to giving you a bad rate.

I actually just experienced this and worked out afterwards that if I had gone with the Harrods rate I would have saved about .0070 points after taking into account all the fees etc... (3% Citi). Harrods basically pads their rates by about 3% anyways based on my experience. But then it is my understanding that MC charges 1% on any currency foreign purchase, so I would have gotten a Harrods rate in USD, which is interbank or so +3%, with +1% added for MC fee (since I Citi adds 2% on thier own to make total Citi of 3%)

I took my cc rate when asked though they wont always ask you.

Interesting though that their systems or any system are smart enough to determine that your card is USD based.

I'd be surprised if this ever saves anyone much money, and I think it will usually cost you a lot. My guess is that the merchant (or its bank) is building in about a 3% fee in their conversion to dollars. Since most credit cards now charge a fee for either a charge in foreign currency or a charge in a foreign country even if in dollars, you'll get your card's fee added on top of the merchant's fee. Most US cards are now charging a 3% fee so this gimmick will likely cost you another 3% on top of that. Some convenience.

Has anyone encountered a situation where the overseas charge was run through in dollars without asking or when you asked to have it in the foreign currency and they did it in dollars anyway?

At Harrods in London I was not asked if I wanted GBP or USD for a purchase, though it was for a small amount. I think they have to click an option before proceeding with the transaction so some ask you your and some don't so that they can move on.

I got the same question some time ago while shopping (with my US-based card) at Harrods. So, on multiple purchases on the same day, I did some in GBP and some in USD.

When the charges posted on my stmt, I calculated that their conversion rate to USD was to the merchant's benefit. There's no rule that requires the merchant to use the "best" currency conversion rate. So, if asked, I always transact in the local currency.

This is something known as dynamic currency conversion. It is ALWAYS to the merchant's advantage.

I have run into it in Scotland, England, and Ireland. Each time the conversion rate was about 5% higher than the official interbank rate. The merchants are REQUIRED to offer you a choice of the local currency or your home currency. There is an option for them to put the charge through in the local currency. If the clerk says it can't be done, ask for the manager.
If the choice is not offered, write "currency choice not offered" above your signature and challenge your charge later via your CC.

To add insult to injury, MC will be adding on a 0.8% charge on any charge made in US$ done outside the US. VISA had attempted to do this as well previously but withdrew the charge. But if MC succeeds in going ahead with the charge, VISA will most likely try to resume the charge as well.

Always choose the local currency for your foreign charges.

I know that Chase has a 3% foriegn conversion rate.

That is the acct I have.

Specifically, whose rule is this?

about a year ago i had a rental in london charge me in USD at a very bad rate without giving me the choice. it was difficult to contest with credit card co or rental co mainly because i noticed it too late.

AMEX tacks on 2% for charges in a foreign currency. They do not charge if the transaction is in USD, regardless of where geogrpahically the transaction is made (bogus VISA/MC charge if you ask me).

I normally charge in the local currency because the merchant probably won't be able to beat 2%.

this is a pilot being run in europe which isnt good news for the rest of the world. I recently had a holiday in spain and everytime I used my mastercard I was charged in sterling and when I asked why 5/6 times the person claimed they couldnt understand me :mad:

It's supposed to be that you are offered a choice but it rarely happens and when you complain to your CC company the reply i got was 'we are a small link in the chain, us complaining wont make any difference'

Nice to see the wee man is ignored yet again.