Dynamic currency exchange
 

Here's a good example of so-called dynamic currency exchange. When I checked out of the Sheraton on the Park in Sydney I was presented with a bill for incidentals stated in Australian dollars, but the credit card slip came in US dollars for $244.11. It had written on it in huge bold-faced letters 'no commission'. I refused to sign the charge in US dollars and requested the charge in the original amount in Australian dollars. The charge showed up on my CapitalOne VISA converted to $233.13, a difference of $10.98, or 4.7%. It is true, of course, that on a typical US credit card with a forex fee of 3% the charge might have been as high as around $240, but this so-called no commission currency conversion is even more expensive. The lesson seems to be that conversion to US dollars abroad should also be refused.

Most US credit cards do not charge a forex fee - they charge a fee for any foreign transaction, even if the transaction is in US$.

No doubt about it, the so-called "dynamic" currency charge is a rip. Why not just call it foreign merchant's tourist overcharge fee?

Anyhow, just back from Spain and some of my charges have arrived on the latest bill.

I noted mysterious charges for "Eci" which turned out to be El Cortes Ingles the biggest store there. Eci, whenever I used my US credit card there, presented me with a slip that gave me a choice as to being charge in $s or Euros. $ charge would it stated, incur a 2.5% forex fee (obviously meant to sound cheaper than the 3% credit card fee). I did not bite and see that all my charges came though in Euros.

It was quite difficult to get into this the first time with a non-English speaking clerk while I was in jet lag shock. She insisted I had to do something (choose currency on slip), but I didn't know what she was talking about. Apparently, at Eci, if you make no choice, the billing comes in Euros.

Thanks to OP for providing some hard data on this odious practice's costs.

You should be grateful that El Corte Inglés now asks. When this whole thing first started there a while ago, they would demand payment in cash if the customer wouldn't accept dynamic currency conversion. I do speak Spanish, but to no avail at the time. They had to call a manager to reverse the dollar charge, and I gave up on the purchase.

Good work! This is exactly what to do when faced with this rip-off: Refuse to sign a chit in dollars and demand local currency. If it takes a lot of time or makes the merchant nuts, all the better to learn that this is a bad idea from their standpoint too.

This happened to me once last year at the Duty Free Shop in SYD airport.

I insisted they cancel the first charge in A$ and bill me in US$, which they finally did but took time to do.

I had this happen during my last visit to HKG. The problem is I wasn't told about it, and don't know whether I've been charged in HKD or EUR (neither box had been ticked). I will be quite miffed should the charges appear in EUR, but I guess it's a lesson learned...

The problem most folks have is exactly the opposite -- the vendor wants to charge in dollars (at *his* conversion rate, which is usually higher than the credit card's), and since the transaction is foreign-based, if you have a U.S.-based VISA or MasterCard (or, I believe, Citi AMEX) you'll get charged the foreign transaction fee anyway.

____________________
MM => UA 99%, AA 95%

It all depends on the base currency for your credit card. If its US dollars, then you're much better off with a charge in AUSTRALIAN dollars. Your credit itself will do the exchange to US dollars at a better rate than the foreign merchant or foreign bank.

This practice should be illegal (not sure underwhose jurisdiction, but should be anyway), plain and simple. The average infrequent traveler probably is not even aware of the 3% or so foreign transanction fee on most cards untile and unless he examines his credit card statement, let alone the additional fees incurred on the spot by dynamic conversion. This should not be the consumer's problem to figure this out.

Congrats to the OP for posting the EXACT magnitude of the ripoff, in Dollars and Cents, of this abomination. And it is true that even if the transaction is posted in US Dollars, most American cardholders are charged the 3% transaction fee by their bank, IN ADDITION to the ripoff at the merchant's end.

Most discussions of this in the travel magazines are vague and warn against the practice; here you can see what you're "spending" to spend. A total ripoff, and a VERY lucrative, undeserved one. Don't fall for it, and DO COMPLAIN and INSIST on the merchant making it right, and tell them why.

This is happening in the USA as well: at the gift shop at the Empire State Building our credit card slip came in euros with a sentence that "I have been informed and have agreed to be be charged in euros, blah, blah...." while of course the sales clerk never even mentioned this scam.

Avis certainly is very eager in offering to bill in your own credit card currency rather than US$. I have learned to decline this "help".