subcon

i am having a problem with the concept and operation of the DCC...

i'm fairly clear that it can entail as much as a double % assessment per charge but don't quite get the mechanics as outlined in the washington post article. could someone give the dimwitted explanation?

i'm now wondering if it wouldn't be more prudent to take out a larger chunk of cash from the atm and then, pay in local currency rather than by credit card or what.

i know myself. the first time i encounter a bill pre-converted to US$, i'm going to freak out (feeling cheated) and i'd rather have some rationale for disputing DCC with local merchants.

any help understanding the downside of DCC (in concrete terms and simple illustrations) would be much appreciated...

rex

The dimwitted explanation? They convert your bill from euros to dollars (for example, if your credit card is issued from a US bank) - - at whatever rate they deem appropriate (for providing you this "service"), and then charge you that amount in dollars against your credit card. Tthe "scam" is in the conversion. Hotels do this at the front desk (exchanging currency at a "courtesy" rate) - - but they post the rates, and if you choose to get ripped off this way, that's your choice. It's (allegedly) "illegal" (a violation of their merchant terms with the credit card company, but I don't know; I am not a lawyer) to do this conversion and bill you in a currency other than what they do business. But clearly some places are pulling it.

Does that help?

Would you be better off to pay in cash? Depends on whether you're getting a good exchange on that cash. In theory, you are often not getting as good a rate (when you get cash - - depends on how and where you gewt it) as the credit card would apply to the charge when it goes through and ends up on your statement.

Best wishes,

Rex

xyz123

It is quite simple...if you are presented with a charge slip with a USD amount on it (I assume you are American but if you are Canadian it would be a CAD amount, if Australian an AUD amount), then they are trying to pull this near criminal scam. By their agreement with visa, they are allowed to bill you in the currency of your credit card but they must give you the choice of whether you wish to or not. Most merchants do not ask as they are supposed to before pulling this and count on you being moronic enough to accept this rip off....when you notice it they give lies to you like they are required by law (or by visa) to do this, that the terminal does it automatically (it does not they must press a button indicating you agree to be ripped off) that the USD amount is there as an approximation to help you understand how much it costs in your currency, that it is too late and the charge cannot be reversed. If they pull this on you, tell them you will not sign the receipt and if they refuse to void the transaction and do it properly and legally, demand to see the manager. Don't take no for an answer. If they still refuse to do it legally, circle the amount in foreign currency and write on the charge slip dcc declined instead of signing it.....then tell them you intend to dispute the charge with visa and they will then have to present the credit card slip where you have indicated you have declined the dcc near criminal scam.

I wouldn't pay cash.....you have every right to use your credit card in any way you please. It is the merchant who is pulling an illegal activity.

WillTravel

I found it impossible to get my Spanish hotel to do it "right", so I did get the charge reversed and I did pay cash. No doubt a more forceful person, who possibly spoke business Spanish, might have succeeded.

I much prefer paying cash anyway. No more arguments with restaurant owners who claim their credit card machines are broken. No worries about the card number being stolen (although I know one's liability is very limited in such instances). With my ATM card, I get the interbank rate (or very close to it), plus a $3 Canadian charge every time I withdraw money in Europe or the US.

If I had to use a credit card, it would be American Express, which doesn't allow this nonsense. But of course not so many places take AMEX as take MasterCard and Visa.

Holly_uncasdewar

You're not only running the risk of the DCC scam with a credit card, and then having to decide whether to take it up with the proprietor, or not, and the hassle that can ensue with that, but you're also paying - with most cards, anyway - a percentage of your transaction in bank fees just for doing the i'natl monetary conversion. I have always dealt only with cash, gotten from ATMs, and have never had to deal with either ripoff. Just my own personal preference.

Robespierre

[Sigh.]

1. There are debit cards that don't mark up foreign currency transactions (either purchases or cash withdrawals).

2. If you write EUROS/POUNDS/SHEKELS NOT OFFERED on the charge slip and tell the establishment you intend dispute it when you get home, they will probably present you with a new slip in local currency before you get to the door.

3. If you pay with cash, you are playing into the merchant's hands - because he saves the "discount" points he would have had to pay on a card transaction.

Holly_uncasdewar

Forgot to mention one of the other advantages of paying with cash. On my last trip, I was offered a 10% discount twice - without even asking for it - when they saw I was pulling out currency. One was in a jewelry store in Milan, the other was buying pottery in Florence. Needless to say, I was stunned that they offered the discounts on their own. Many hotels are also known to offer discounts for cash.

ira

Hi subcon,

To summarize:

DCC is the merchant's way to get more euro from you than you would normally have to pay.

You don't have to accept a charge in anything but local currency.

If they insist, pleasantly refuse to sign the credit slip.

If they still insist, yell "Help Police".

Sometimes you can get a good discount for cash. Ask before you get your bill.

People who do this are usually trying to avoid payig taxes, but that has nothing to do with you.

Hope this helps.

Christina

Aside from the establishment basically just working as an exchange bureau for you, from what I've read, some credit cards will still charge you a foreign transaction fee on that amount, even though it as been "converted" to USD. Some cards charge it for any transaction in a foreign country, regardless of what currency the charge comes through in.

xyz123

Christina..

Visa actually started doing that some time around last April but because of the bad press said they would be re-evaluating it and dropped it. Mastercard announced this would go into effect in November...I don't really know if either one has actually done it.

subcon

thanks to all for your replies...

i generally use american express where it is accepted. i have a capitol one visa which i'll use for the hotel and atm cash withdrawls. the hotel is one at which we always stay so it's unlikely they'll try to scam me.

for other purposes i think i'll just pay cash. i don't like confrontations overseas and couldn't care less that the proprietor avoids the visa charges (it's the same cost to me either way).

again, you've been very helpfull.

rex

topping...

Intrepid1

You would THINK that if your CC was charged in your local currency that the CC issuer would not be able to levy a "foreign transaction fee" but some of them do, as was stated above.

To me, THAT is as much a "scam" as anything. But the lender of money always has the upper hand.

I really hope everyone here who has treated you like some sort of jerk because you didn't know all about this aren't themselves acting like "dimwits" and "morons" by running a monthly balance on any of their credit cards.

rex

I think that the term "dimwitted" was mildly in self-mocking jest, as used by the OP. Meant nothing by repeating it.

SusanP

subcon, I hope you don't mean you're going to use a credit card for ATM withdrawals. That is taking a cash advance and incurs very high interest rates that start immediately. I only ask because my Capital One card is not also an ATM card.

In Venice, it was my experience that the clerk usually didn't know about DCC, but it was very obvious that the manager always did.

suze

I have no idea about dynamic currency conversion, but I use ATM and pay in local currency for everything except the hotel bill.

Robespierre

"...except the hotel bill."

Well, if you stay for a week in a 140€ room, your bill will be 1000€. Each percent that you are ripped off represents 10€, or about $12US.

So that's the ONE expense you should look at the closest. If reports are true, you could easily leave $50-60 on the table simply by not insisting on local currency.

gomiki

xyz123: For a recent hotel bill of $470 in Paris, charged in Euros, Visa tacked on a "finance charge for foreign transaction" of $14.90. Guess they haven't dropped it!

dorkforcemom

It seems like we encountered something similar - is this dcc? When in Italy & the charge slip came for us to sign, it was listed in both euros and U.S. dollars...what's that about?

Christina

dorkforcemom -- that sounds exactly like what this is talking about. Anytime the bill is listed in local currency and also USD, you can bet something fishy is going on.

gomicki -- I'm not sure why you thinmk it wouldn't be on that bill if it were charged in euor, it's not clear if that's what you mean. xyz meant that Visa was talking about dropping a surcharge when it has already been converted to USD.