Better to charge in Euros or dollars?
Jul 26th, 2009, 07:01 AM
#1
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Better to charge in Euros or dollars?
We just returned from Ireland and most places offered to put charges through in Euros or dollars. I choose dollars thinking I wouldn't be charged an additional fee on my credit card but then later I read in my Fodors guide that it would be better to charge in Euros. Does anyone know which is better?
Jul 26th, 2009, 07:08 AM
#2
You chose wrong - now you know better for next time 
Always (well almost always) it is better to pay in local currency.
Not only do you have no control over what exchange rate the merchant used, your CC company will still add on the foreign currency conversion fee (even though they don't have to convert anything)
Always (well almost always) it is better to pay in local currency.
Not only do you have no control over what exchange rate the merchant used, your CC company will still add on the foreign currency conversion fee (even though they don't have to convert anything)
Jul 26th, 2009, 07:21 AM
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You were the victim of a gigantic scam called dynamic currency conversion (dcc) that begain about 15 years ago in Ireland and has metastasized throughout the travel world.
To explain it...both mastercard and visa used what is called the interbank rate for currency conversions; this is the rate banks apply to each other for millions of dollars of foreign exchange each day. This rate is published daily in the papers. Mastercard and visa add a fee of 1% for doing this conversion and assuming the risks of currency fluctuations on a daily basis. Unfortunately, since this is a cash cow, many banks, who have nothing to do with the exchange (the charge reaches them already converted to your currency, I assume in this case US$, these fees are totally a rip off. Some good guy banks, only pass along the 1% mc/visa fee to their customers. There are a couple of US banks (Capital One, Charles Schwab) that eat the 1% fee....but you still do much better by using your credit cards than exchanging cash (where the mark up can be as much as 10% or more)...ok.
Now many local credit card processors have come up with a scheme called dynamic currency conversion. In this scam, where you were victimized, the merchant sets whatever rate he or she wants for the exchange, invariably more than the interbank rate + 1% used by mc/visa. You are presented with a sales slip which has both the amount in the local currency (in this case euro) and a converted amount in your currency US$. You sign a statement agreeing to the conversion and the credit card processor now has the charge enter the international credit card system in your country converted to that amount! The payment processor touts this as a service conveneint for the customer (what a laugh)....and to add insult to injury, mc/visa now add the 1% fee anyway to any transaction incurred outside your country even if done in your currency. And of course, the near criminal banks also add on their 2% fee. So it's a losing situation, big time.
Now at least you were asked whether you wished to be scammed which is a requirement of mc/visa (no merchant may use the dcc scam without offering to run the charge in local currency)...because of the unfavorable publicity, many of the Irish merchants have at least begun to do this. But many merchants still do it automatically and pressure you to sign the sales slip. If you notice what's going on, they have several lies ready...
1. The converted amount listed is just for your convenience. Your bank will still do the conversion (then why am I being asked to sign a statement saying I agree to the conversion).
2. The rate is the same as the banks charge (right, check it out and see this is a lie)
3. It is done automatically by the terminal and I have no control over it (wrong, because of the mc/visa rule before the transaction is completed, the terminal asks the merchant if the customers wishes to be scammed oops have dcc performed on him)
4. It's too late, it's done (wrong any transaction can be voided)
5. If all else fails, especiallhy in other parts of Europe, no speak English.
If they pull this garbage on you at any time, politely ask the charge be voided and re-run properly in local currency. If the clerk refuses and throws out any of the above lies, politely ask to see the manager. If he persists in these lies, simply cross out the converted amount, circle the local currency amount and inform them you will be disputing the charge as they are not following mc/visa regulations and do it. The charge will be charged back to the merchant and he will be forced to do it properly. (Under no circumstances hould you give in to this scam and pay in cash...it is their obligation to follow the mc/visa rules).
Sorry you were unaware of this scam. It has come up from time to time on this forum. But you'll know better the next time it happens and maybe osme of the people who read this will know that what they have to do is just say no.
Incidentally, American Express does not allow this scam on its cards. Perhaps one of the reasons some merchants don't want to accept American Express.
To explain it...both mastercard and visa used what is called the interbank rate for currency conversions; this is the rate banks apply to each other for millions of dollars of foreign exchange each day. This rate is published daily in the papers. Mastercard and visa add a fee of 1% for doing this conversion and assuming the risks of currency fluctuations on a daily basis. Unfortunately, since this is a cash cow, many banks, who have nothing to do with the exchange (the charge reaches them already converted to your currency, I assume in this case US$, these fees are totally a rip off. Some good guy banks, only pass along the 1% mc/visa fee to their customers. There are a couple of US banks (Capital One, Charles Schwab) that eat the 1% fee....but you still do much better by using your credit cards than exchanging cash (where the mark up can be as much as 10% or more)...ok.
Now many local credit card processors have come up with a scheme called dynamic currency conversion. In this scam, where you were victimized, the merchant sets whatever rate he or she wants for the exchange, invariably more than the interbank rate + 1% used by mc/visa. You are presented with a sales slip which has both the amount in the local currency (in this case euro) and a converted amount in your currency US$. You sign a statement agreeing to the conversion and the credit card processor now has the charge enter the international credit card system in your country converted to that amount! The payment processor touts this as a service conveneint for the customer (what a laugh)....and to add insult to injury, mc/visa now add the 1% fee anyway to any transaction incurred outside your country even if done in your currency. And of course, the near criminal banks also add on their 2% fee. So it's a losing situation, big time.
Now at least you were asked whether you wished to be scammed which is a requirement of mc/visa (no merchant may use the dcc scam without offering to run the charge in local currency)...because of the unfavorable publicity, many of the Irish merchants have at least begun to do this. But many merchants still do it automatically and pressure you to sign the sales slip. If you notice what's going on, they have several lies ready...
1. The converted amount listed is just for your convenience. Your bank will still do the conversion (then why am I being asked to sign a statement saying I agree to the conversion).
2. The rate is the same as the banks charge (right, check it out and see this is a lie)
3. It is done automatically by the terminal and I have no control over it (wrong, because of the mc/visa rule before the transaction is completed, the terminal asks the merchant if the customers wishes to be scammed oops have dcc performed on him)
4. It's too late, it's done (wrong any transaction can be voided)
5. If all else fails, especiallhy in other parts of Europe, no speak English.
If they pull this garbage on you at any time, politely ask the charge be voided and re-run properly in local currency. If the clerk refuses and throws out any of the above lies, politely ask to see the manager. If he persists in these lies, simply cross out the converted amount, circle the local currency amount and inform them you will be disputing the charge as they are not following mc/visa regulations and do it. The charge will be charged back to the merchant and he will be forced to do it properly. (Under no circumstances hould you give in to this scam and pay in cash...it is their obligation to follow the mc/visa rules).
Sorry you were unaware of this scam. It has come up from time to time on this forum. But you'll know better the next time it happens and maybe osme of the people who read this will know that what they have to do is just say no.
Incidentally, American Express does not allow this scam on its cards. Perhaps one of the reasons some merchants don't want to accept American Express.
Jul 26th, 2009, 08:11 AM
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I guess you could call this an entrepreneurial business rather than a scam, as long as you were asked. I think it is a scam when they don't ask you and do it automatically (which they aren't allowed to do), or claim they can't charge you in euros (or whatever the local currency is). The OP could have asked what the exchange rate was, after all, but didn't.
It's possible the credit card might not charge a currency conversion fee, maybe they all don't when it comes from another country, even if in USD. I admit I think they most do by now, but I think it's always a bad idea to assume anything about your own credit card charges without knowing what their terms are.
It's possible the credit card might not charge a currency conversion fee, maybe they all don't when it comes from another country, even if in USD. I admit I think they most do by now, but I think it's always a bad idea to assume anything about your own credit card charges without knowing what their terms are.
Jul 26th, 2009, 10:27 AM
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For goodness sakes, we are not talking millions, we talking a few extra bucks. Who cares? Your on holiday! Don't worry about the small stuff. Enjoy life and don't worry about someone making 2 or 3 dollars. If it bothers you so much just pay cash.
Jul 26th, 2009, 01:56 PM
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<i>Your on holiday! Don't worry about the small stuff. Enjoy life and don't worry about someone making 2 or 3 dollars.</i>
That's why the banks get away with all these extra fees even in our daily lives--a couple bucks here for using someone else's ATM (the electronic transfer probably costs pennies), another little fee for asking for your balance at the ATM, etc. etc. They count on us not sweating the small change.
That's why the banks get away with all these extra fees even in our daily lives--a couple bucks here for using someone else's ATM (the electronic transfer probably costs pennies), another little fee for asking for your balance at the ATM, etc. etc. They count on us not sweating the small change.
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Jul 26th, 2009, 02:21 PM
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Before I was a Fodorite I made the same mistake and let them charge me in dollars when it was offered. At the time I did not think to ask what kind of exchange rate they were using but now I know I got tatooed big time. But that's OK, we learned our lesson and will not make the same mistake again.
Jul 26th, 2009, 03:05 PM
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I've been a victim of this scam too, funny, I was in a hurry and just didn't read the fine print on the slip. The card is a Luxemburgian card in €. In India instead of rupees, I was charged in USD on my € visa card. The amount was about $5 so no big deal.
Jul 26th, 2009, 03:16 PM
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Jul 26th, 2009, 03:19 PM
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But wait! There's more! (I always wanted to say that!)
If, in the US, you buy, in the US, in US dollars, from a company or person (say, at a crafts fair) that bills its credit cards from a foreign location, you STILL get dinged for the "foreign charge" fee. This is more than a scam, it's a blatant ripoff!
If, in the US, you buy, in the US, in US dollars, from a company or person (say, at a crafts fair) that bills its credit cards from a foreign location, you STILL get dinged for the "foreign charge" fee. This is more than a scam, it's a blatant ripoff!
Aug 8th, 2009, 07:25 AM
#13
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Thank you everyone for your help. I just had the foreign transaction fee put on my credit card even though I charged in dollars whenever asked. I will have to pay more attention to this board in the future. Also, Fodor's Ireland did have a warning about this but I didn't notice it until the trip was almost over.
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