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Credit cards usage in Europe : dynamic currency conversion.

Credit cards usage in Europe : dynamic currency conversion.

Old Mar 5, 2013, 4:43 am
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Credit Cards usage in Europe : DYNAMIC CURRENCY CONVERSION -A SCAM ?

[/B][/B]Anyone experienced DYNAMIC CURRENCY CONVERSION in Europe ?
What are the best practices
Is it fair / unfair ? Is it a scam , if so, why and how so
?

Last edited by bearbrick; Mar 13, 2013 at 12:29 am
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Old Mar 5, 2013, 5:01 am
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Originally Posted by bearbrick
Anyone experienced DYNAMIC CURRENCY CONVERSION in Europe ?
What are the best practices
Is it fair / unfair ? Is it a scam , if so, why and how so
?
It's widespread. It's not a scam.
You usually are given the option -- with an ATM for example -- of taking the amount in $$ or whatever your home currency is or accepting the local currency.
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Old Mar 5, 2013, 7:36 am
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Not a scam per se, however, offering instant conversion without disclosing the fee that will be incurred is, to me, an unethical business practice.
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Old Mar 5, 2013, 8:10 am
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Originally Posted by UAPremExecflyer
It's widespread. It's not a scam.
You usually are given the option -- with an ATM for example --.
this past year, we have been in the touristy parts of france and italy. i have never noticed that offer in vce, bcn, or lys. i hit a different machine every day and pull about 200. never seen anything but euro offered.
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Old Mar 5, 2013, 8:22 am
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Originally Posted by Non-NonRev
Not a scam per se, however, offering instant conversion without disclosing the fee that will be incurred is, to me, an unethical business practice.
The problem is that it is very hard to compare rates. But as a rule of thumb you always lose money if you use DCC unless your card has high currency conversion fee. But in some cases advantages in getting a receipt in your own currency outweighs small monetary loss.
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Old Mar 5, 2013, 8:27 am
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Originally Posted by Kallio
The problem is that it is very hard to compare rates. But as a rule of thumb you always lose money if you use DCC unless your card has high currency conversion fee. But in some cases advantages in getting a receipt in your own currency outweighs small monetary loss.
However, your card issuer may charge a foreign currency fee with DCC as well, making it a doubly bad deal.

I would say it's fewer than 1 in 50 transactions in continental Europe where I experience this. And I've never not been given the option to use the local currency*.

* Well, once I was told it was automatically selected, and couldn't be reversed after that was the case. So I simply took my card out of the c&p reader, whereby their systems froze up. It was somehow possible to change it after that...
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Old Mar 5, 2013, 11:06 am
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Originally Posted by UAPremExecflyer
It's widespread. It's not a scam.
You usually are given the option -- with an ATM for example -- of taking the amount in $$ or whatever your home currency is or accepting the local currency.
I would say in actual practice it is often a scam (because businesses don't give you a real choice in clear terms and ATM screens are confusing), and the practice is spreading.
You need to be very careful to avoid paying too much - always refuse DCC.
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Old Mar 5, 2013, 11:26 am
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Originally Posted by Sjoerd
I would say in actual practice it is often a scam (because businesses don't give you a real choice in clear terms and ATM screens are confusing), and the practice is spreading.
You need to be very careful to avoid paying too much - always refuse DCC.
I've always assumed this to be the case, however I was recently in Portugal and I realised after the fact that one of my charges had used DCC and the payment processed in CHF. Interestingly I got a better exchange rate on the DCC payment than the other transactions that were transacted in Euro that were incurred the same day (and posted to my Mastercard account in CH the same day). I keep meaning to try this again to do another comparison.
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Old Mar 5, 2013, 12:26 pm
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Originally Posted by stut
However, your card issuer may charge a foreign currency fee with DCC as well, making it a doubly bad deal.
This is what happened to me the first time I encountered DCC, at the Hotel de Rome in Berlin in 2006. The check-out clerk offered to process my payment in either Euros or Dollars. I did ask if a fee was charged, and he immediately told me that the fee was 2.8%.

Since I was going to pay with a MasterCard card that charged a 3% foreign conversion fee*, I accepted DCC, thinking I was ahead by 0.2%.

When I received my credit card statement, I saw that a foreign transaction fee had been charged in addition to the hotel charge in dollars. I called the card issuer to ask why, and was told that they actually do not assess a foreign currency conversion fee - they instead charge a foreign transaction fee for ANY transaction originating outside the U.S., irregardless of the currency involved. I went back later and read the card Terms and Conditions, and the fee was spelled out (lesson learned - read those Ts and Cs).

Needless to say, I have never used DCC again, and have since acquried a credit card that does not assess foreign currency or foreign transaction fees
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Old Mar 5, 2013, 12:58 pm
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There is a long thread about DCC in the TravelBuzz forum. Basically, it is a complete scam and you should ALWAYS refuse when it is offered. Per the merchant agreement with the credit card networks, a reasonable choice must be offered to the customer at the time of transaction--which it should be by any business that cares about its reputation. If a reasonable choice is NOT offered (which does happen), you should immediately void the transaction. If, for whatever reason, voiding the transaction is not possible (clerk insolence, rigged POS system, etc.), write "CHOICE NOT OFFERED" on the slip, circle the transaction amount in the local currency, take a picture of the slip with your camera/phone, and then dispute the charge upon returning to your home country. The only way merchants will stop trying to scam people with DCC is if their supposed victims fight back.
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Old Mar 6, 2013, 3:25 am
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DCC is definitely a scam. Whilst it's offered as a service, both the merchant and the bank processing the transaction take a cut.
Whilst some merchants are perfectly honest and ask you, too often you aren't given a choice (Duty-free at LHR is an example). In these cases just refuse to sign the slip, ideally take it and tear it up, so the merchant can't forge a signature. They will usually produce a correct slip, or else you can just walk away. Remember US dollars are not legal tender outside the USA (well there are a couple of exceptions, but ...). No-one can force you to pay in a currency that isn't legal tender.
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Old Mar 6, 2013, 3:38 am
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Originally Posted by catandmouse
DCC is definitely a scam. Whilst it's offered as a service, both the merchant and the bank processing the transaction take a cut.
Whilst some merchants are perfectly honest and ask you, too often you aren't given a choice (Duty-free at LHR is an example). In these cases just refuse to sign the slip, ideally take it and tear it up, so the merchant can't forge a signature. They will usually produce a correct slip, or else you can just walk away. Remember US dollars are not legal tender outside the USA (well there are a couple of exceptions, but ...). No-one can force you to pay in a currency that isn't legal tender.
But you can just choose the local currency correct ? And that would not amount to any charges ??

My CC is Australian issued and every foreign transaction comes with a charge , DCC , notwithstanding .


Thanks everyone for the replies and invaluable discussion so far !
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Old Mar 6, 2013, 8:35 am
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Originally Posted by bearbrick
But you can just choose the local currency correct ? And that would not amount to any charges ??

My CC is Australian issued and every foreign transaction comes with a charge , DCC , notwithstanding .


Thanks everyone for the replies and invaluable discussion so far !
is there an etrade or a shwabs in oz? their brokerage banks in usa are excellent. ATM fees are zero, and cash is 1% over bank rate. look at the other brand name brokers fidility and TD american for OZ services.
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Old Mar 6, 2013, 9:14 am
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If you are told the DCC rate upfront, then it isn't a scam. Although you would need to know the rate that your card is going to use in order to make any meaningful decision.

If you know your card charges 3% foreign currency fee and DCC is treated like a domestic transaction, then if the DCC rate is only 2% more than the visa (etc.) interbank rate, it may be better to choose that.
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Old Mar 6, 2013, 1:11 pm
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DCC scam?

Originally Posted by :D!
If you are told the DCC rate upfront, then it isn't a scam. Although you would need to know the rate that your card is going to use in order to make any meaningful decision.

If you know your card charges 3% foreign currency fee and DCC is treated like a domestic transaction, then if the DCC rate is only 2% more than the visa (etc.) interbank rate, it may be better to choose that.
It is not a scam per se. As an earlier poster pointed out, you are shown the amount up front.

However, usually the DCC rates are not favorable. Example: Recently I was offered to put an amount on DCC ($81.82). I chose to pay in PHP, and the charge on my card was $79.72). Difference of little over $2. There is no foreign transaction fee for that particular card. This seems small, but I have been had in the past when a $1200 hotel bill was inflated by approx. $90 using DCC.

However, it tends to become a scam under certain circumstances:

a. The merchant advises you that it is in your best interest to use DCC... (The Single malt Whiskey shop in T4 Heathrow) when actually the CC exchange is better...

b. The merchant does not offer the choice (it may or maynot show on the credit slip that you sign) and charges DCC automatically. This happens a lot in PRC with hotels. My unscientific research shows that they are given advantageous (lower rates that they pay as commission for cc charges) by processing banks to push the custome to DCC.

It would make sense to use DCC when traveling in a country where the currency is volatile and tanks on a daily basis (say Zimbabwae... or Iran during a crisis... in other words where you expect the value of the local currency to go down rapidly).

My 2 cents worth.

Last edited by spc354; Mar 6, 2013 at 1:13 pm Reason: adding info.
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