Use your US credit card (billed in $ USD) outside the US, how should the currency conversion work? How about in this commonplace scenario:

A car company's central reservations here in the States quotes an amount in $ USD for a rental at a franchise location outside the country, that amount supposedly inclusive of all taxes and fees. They ask what credit card you will be using, and may even ask for the card number, though they tell you the card will not be charged in advance. They send you an email confirming the reservation for your dates and the amount to be paid for the particular type car. Later, when you turn in the car (no damages and gas tank full), you present the same US credit card you said you would be using to pay. Instead of entering the charge in dollars or entering it in the local currency at a rate approximating what your credit card company would use for the exchange, the car rental company uses their own arbitrary rate, which is close to 10% higher, claiming it is their right to do so because of the more than dozen places you have initialed to indicate accept/decline various options, one shows a fixed exchange rate printed there.

I think this imposition of a very hefty "surcharge" of the local company's choosing amounts to a scam. While I have used my credit cards any number of times outside the US, I have never encountered this before, or at least I wasn't aware of it.

How should it work when one expects to pay a sum in USD (the reservation confirmation stated the amount in USD and that sum appeared on the front of the contract itself)? Does the merchant have an option of whether to enter the sum in the local currency or in USD as originally quoted? And if the charge is to be entered in the local currently though originally quoted in USD, they are free to set the exchange rate themselves?! What is the role of the credit card issuer in it all? If anyone understands the "mechanics" of this, and how to protect oneself from such shenanigans, I would be interested to hear.

It's difficult (for me) to follow your story because you do not mention the rental car brand, the location, or the actual amount of the overcharge. Did they submit the charge to the credit card company denominated in dollars or denominated in local currency?

Are you asking for advice on disputing this transaction or only to avoid similar problems in the future?

No, I am not seeking advice on how to go about disputing it. I know how to go about that. And I avoided mention of the company, location, and actual amount of the "overcharge" (about 10%, which was about $50 extra) because I was looking for generic advice about the handling of charges billed in one currency, paid in another.

If we were in a restaurant, prices would be stated on the menu in the local currency, the total owed would be stated in the local currency, and the credit card company would "translate" it to $ USD at a market rate of exchange, perhaps throwing in their own 2 or 3% vig to the total appearing on our statement. Those situations are straightforward enough and not my concern. I am asking about hotel or rental car, though, with a sum originally quoted and confirmed in $ USD, which the local merchant later boosts by changing the rate in $ USD into the local currency using the merchant's own arbitrarily inflated exchange rate before ringing up the credit card charges.

I can share my experience with AA. I was in India and needed to make changes to my Itinerary. They quoted me $250 but didnt charge it. They asked me to pay it at the counter. At the counter they gave me an option to pay 250 in USD or in INR. They were giving an exchange rate of 40.80 or something and there would be an additional foreign exchange transaction fee. So i just asked them to charge me in dollars. Now AA had the ability to charge in Rupees and in dollars. Not sure if your car rental co. could do the same.

If the merchant (rental location) is located outside of the US, then that is not, generally, possible.

Yes, absolutely (though some merchants will claim that they can't or don't know how to do that).

In most cases, no -- see above.

Yes, if you have agreed to them doing the conversion, and it sounds like that's exactly what you did:

Thank you for the clarification. When booking a flight, car, hotel or similar outside the US I would expect an exact price in either the local currency or US Dollars, and I would expect the bill to be rendered for the same amount in the same currency as quoted.

I am not sure what you mean by "agreed." I expected in the end to pay the exact same sum quoted in $ USD at the time the reservation was made, then confirmed in $ USD by email notification, and finally printed on the front of the contract know what you Uby email notice, and finally stated on the front of the contract in $ USD when the car was picked up at the location. That would have been $437, not the $490 that was charged through AmEx. If it was a couple of dollars more than $437 and AmEx added 2% for the currency transaction, I would say nothing, figuring that was proper. I think it anything but proper that the amount which appears on my credit card is >10% higher on account of the location's choice of a conversion rate that is well in excess of the market rate.

(I'm headed off to the airport now, so no time to go into further details about the conversation had there at the rental location. You have the basic details, though.)

What's even more evil is when you're overseas, you agree on a transaction at a merchant where the prices are clearly posted in the local currency and you expect to be charged in the local currency (accepting your US card issuer's 0-3% foreign transaction ding), only to find that the merchant has attempted to gouge you by converting the local currency into USD at an outrageously bad rate. (And you know that on top of that gouge, your card issuer will still try to take its 0-3% foreign transaction ding even though they no longer bear any currency conversion work or risk.) Grrr!

And so as to keep vaguely on topic for this forum... no, earning more miles or points through said US card's reward program does not serve to salve the wound!

More than just the "basic details" are needed to fully answer your questions.

In your OP, it says:Could you expand on that a bit more?

What sort of "expansion" are you looking for? I don�t have the contract at hand, but I believe there were at least a dozen places to initial there at the counter. It turns out one of those places did show "1 USD = 11.85 pesos," but I don�t know that I looked at it, or if I did that it should have put me on notice I would not be able to pay with my US AmEx card in USD, especially since the total rental was stated there on the contract in USD, nowhere in pesos. (Additionally, in answer to a question about what it would cost if I were not arriving by plane and renting, the clerk told me something about how I was actually being advantaged by a more favorable exchange rate than a local would pay to rent. I paid this no attention, because it sounded like mumbo-jumbo, and I figured I would be paying the rate central reservations quoted me in USD, the same rate in USD they then confirmed and which appeared in USD on the contract print outed by the Mexican location.)

Am I alone in seeing this as something of a scam, that is seeing a charge 10%greater than the one I booked at? Others would have no problem with this, or they would have been prepared to pay in cash (USD $) when they turned the car back in?

Yes, that is indeed "evil." Any ideas what can be done to avoid being taken advantage of that way? (While out of the country, I keep taking cash out of ATMs and pay most things that way, avoiding the 2-3% vigorish thrown in by the credit card companies for an exchange surcharge and avoiding shenanigans by merchants. Didn�t expect problems with an "international" car rental company.)

Any experience challenging the charge with the credit card company as an improperly inflated one? I don�t see how a merchant can insist upon converting a sum in the local currency to one in USD $ at a rate of their choosing, then getting back more in local currency than the amount would have been in cash. (Are they trying to recoup the merchant fee the credit card company imposes on them?)

Over the years I have disputed numerous forex charges and overseas charges with excellent results. IMHO, it is a good idea to dispute the entire amount and let the merchant try to justify it.

Be very sure you mail your written dispute to the special billing error address on your credit card statement (NOT the address to which you send payment) and that you have proof that the letter was received (enclosing a check with the letter that notes on it "enclosed with billing error letter of xx/xx/xxxx" is a good idea--if you can get a copy of the cashed check) and that you do this within sixty days of the date the statement with the disputed charge was mailed to you. DO NOT rely on phone calls, faxes, email, etc to dispute the charges as only a mailed billing error dispute counts under the Fair Credit Billing Act.

Well, what did you think the purpose of that clause was, exactly?

It's a scheme, also commonly used by hotels. The practice of quoting rates in USD does serve a legitimate need, when the rental location/property is located in a country with an unstable currency.

Then, local managers start to get a bit "creative" by lowering the quoted rates in USD, and inflating the exchange rate ...

Central reservations should have warned you that you will be paying in local currency, at the arbitrary exchange rate, set by the rental location. If they did not, then I would ask them to reimburse you the difference.