BigE

Has anyone else been losing slivers of money when foreign hotels cancel your mistake rate (or non-mistake rate)? It's happened to me a few times.

As an example, I lost $3 from the Le Meridien Picadilly cancellation (about 2.3%). I do realize that $3 isn't much, but if you made enough of these bookings (or more expensive ones, or for 30 nights) it could add up. And it's certainly annoying.

I'm not sure why I lost money after the refunds. It's obviously something to do with different underlying exchange rates going in and out of the currency. But when I check on the visa exchange rate website, http://usa.visa.com/personal/card-be...calculator.jsp, it looks like I should have lost only about .6% by converting into and out of a currency. In my case, the currency also moved slightly against me, accounting for another .5%. Then I lost another mysterious 1.2% on top of that.

Another way of saying the same thing: For the original purchase, the exchange rate stated on my CC statement perfectly matches the visa exchange rate website. But for the refund, the exchange rate for the refund does not match (about 1.3% off, working against me).

One theory is that the hotel used dynamic currency conversion to refund the amount. I don't know how to tell whether that happened. Another theory is that refunds have their own special (unfavorable) exchange rate that doesn't match the exchange rate (or reverse exchange rate) on the website. Or, Visa (in this case) charges a conversion fee on refunds of about 1.3%.

So I'm curious whether anyone has had this same problem or whether I just got unlucky. Maybe it depends on the CC or whether it's VISA/MC/AMEX, etc.. And is there any solution?

Notes: I'm not poo-pooing mistake rates. It might still be worth taking a shot at mistakes, so long as there's the potential to save $$$ on the reservation and there's a 10% or so chance of it being honored. (e.g., 90% chance you lose $3, 10% chance you save $60; you still come out ahead in the long run) My long-term success with these rates is about 25%. And, of course, the problem doesn't apply to charges in USD or where you don't pay up front or when they cancel the reservation before the transaction clears. Also, the hotel sometimes offers some extra compensation (points or a discounted rate).

hco

I always experience this F/X loss on all my cards if I buy something in a foreign currency which is then refunded.

I always figured it was due to different buy/sell rates for foreign currency.

tatterdema

All of mine, including hotels I have booked in a different currency, then cancelled, have been less than $1 in difference. For that reason, I have not even given it a second thought. I write it off as a cost of doing this kind of bargain hunting.

sannmann

If the dollar becomes stronger against the foreign currency between the time the purchase is made and when it is refunded, couldn't someone come out ahead?

tycosiao

I usually call my CC company and they are glad to refund the difference.

YMMV

tatterdema

I think I had an OTA do this to me. I had a charge of 2 cents on my statement to make up for the money I pocketed. It was listed as a dispute.

BenSenise

I have had differences in amounts many times. If they aren't corrected automatically I simply call my cc issuer and they correct it no questions asked.

BigE

Capital One wouldn't help me out (tried email and phone).

jaymar01

Exactly. I once incurred a hotel charge of 10,000 Euros instead of Hungarian forints. The dollar rose while we were sorting the problem out, and I made nearly $300 on the transaction.

Doc Savage

Seems like an obvious risk from playing this game. *shrug*

hco

Amex has compensated me for this.

I've never come out on top...

BigE

It sounds like the consensus is that it's not even a risk. If the currency happens to move in the right direction, you can make a profit. If you lose money, you can complain and get the lost money back (but maybe not with Capital One). You just lose the few minutes it takes to write the email or phone in.

Swiss Tony

I was under the impression that merchants can do one of two things.

They can either refund the amount of money, or cancel the initial transaction. If they do 1) then you get hit for any currency fees twice, but if they do 2) you get a refund for the exact amount the first line hit you with.

Problem is, 1 seems very easy to do whereas 2 is a but more complex so the easy way wins out.

Avnu

Last time I cancelled a flight (bought at Westjet.com) and got my money refunded, my bank actually did both: they refunded the CAD amount at a slightly lower EUR exchange rate and refunded the original exchange fees (calculated as a percentage of the original EUR amount).

iahphx

Yeah, it could work both ways depending on currency fluxuations. But I believe there's at least one bank (US Bank) that charges foreign transaction fees for purchases, but doesn't refund them on refunds. Of course, it's always better not to use such cards overseas.