exchange surcharge on U.S. credit cards?

Old Jun 20th, 2005, 09:39 PM
  #1  
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exchange surcharge on U.S. credit cards?

A friend just got back from her first visit to London in years and mentioned that one good thing about the B&B where she was staying was that it charged her credit card in dollars rather than in pounds. The advantage, she says, is that the American credit card companies have started adding a 3% surcharge on foreign exchanges.

Does anyone know anything about this practice? If true, it represents yet another outrage by these truly evil and oppressive companies, at a time when the weak dollar is already such a burden for American visitors. It's also a useful warning to be even more careful to avoid using a credit card the next time I'm in the UK.
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Old Jun 20th, 2005, 09:51 PM
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I am afraid your friend was snookered. Some places are starting to offer to charge US$ instead of £ or €. But the rates they use are not in your favor.

And in case you hadn't noticed the $/£ exchange rate is better than it has been in months. . . . . .
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Old Jun 20th, 2005, 10:39 PM
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It's my understanding that no matter what currency the card is charged in, the 1% is still added to all VISA purchases outside the US, then the company that issued the card adds another one, two or even three percent. So your friend was charged a higher than ordinary exchange rate PLUS the additional 1% by VISA, PLUS whatever percentage her card issuer (bank?) added on. Do a search here on <dynamic currency conversion> for the particulars.
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Old Jun 21st, 2005, 08:45 AM
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topping
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Old Jun 21st, 2005, 08:56 AM
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P_M
 
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Charging a credit card in US dollars is a scam called Dynamic Currency Conversion. What they do is charge you in dollars, using a terrible exchange, sometimes as much at 10% above the official rate. She would have been much better off to have it charged in £'s and pay the 3% conversion fee. We have discussed this at length on this board and it is never a good thing.
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Old Jun 21st, 2005, 08:58 AM
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Find out exactly how much the amount your friend was charged was supposed to be in pounds, and then find out how many actual dollars that turned out to be on her credit card statement. Then we can tell you more clearly how much more she paid than if it had been charged in pounds in the first place.

I had a very rare example of a restaurant in London charging me in dollars. It was a rather small amount (fish and chips for two) so I didn't argue about it. I was amazed when I returned to find out that the final amount was actually less than the same amount would have been if charged in pounds (compared to other charges that same day on the same card). So apparently they were telling me the truth when they said they had a regular US account and there was no converstion charge at all -- but I suspect that is NOT the norm for such charges.
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Old Jun 21st, 2005, 09:05 AM
  #7  
P_M
 
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I'm glad Patrick didn't get ripped off, but as he said, that situation is rare. Please do as Patrick suggested and find out what how much she paid in dollars vs pounds. If you want, we'll do the math for you and let you know if it's a good deal or not.

Also, please do a search on Dynamic Currency Conversion and you will see just how many posters have been ripped off by this practice.
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