Credit Cards - USD vs EUros

Always pay in euro, paying in dollars involves another conversion rate transaction.

It's called Dynamic Currency Conversion (DCC), and it is a bad deal. Regardless of the currency charged in, your bank will still charge you the same conversion rate, as high as 3% for big banks, on top of what the merchant charges to convert euro to USD. Plus, the conversion rate from euro to USD that the merchant charges will not be very favorable.

It's been mentioned in many threads on here. Do a search on DCC (dynamic currency conversion) and you'll see lots of comments on it. All (well I'm sure there's one or two that disagree) will tell you it's not in your best interest to choose that option.

Yes, it is quite common and frequently discussed here. It is called Dynamic Conversion. You will get the short end because the vendor gets to decide the exchange rate and it will not be to your favor. Always, always, say NO - local currency only.

This choice is a true scam - - and I don't use the word lightly - - otherwise known as dynamic currency conversion, or DCC. It's spreading unbelievably rapidly. The scam part is that the somewhere in the transaction the payer gets a worse exchange rate than if charged in euros. The bank or the enterprise benefits; or maybe they share. Your best bet is to use a cc with no foreign transaction charge. Lots of US banks are now offering them, including my Chase and Capitol One Visas, and Amex. If you use a card with such a fee, you may get it levied even though you opted for DCC. It's just another of the many ways banks screw more out of hapless consumers. No reason to enable them.

It is becoming very common at ATMs as well.

They taught it as a "convenience" to you the customer but in reality it allows THEM to set the exchange rate. Of course their exchange rate will favor them.

Thanks everyone. I had never heard of this until the other day- an acquaintance of my husband, who just returned from Rome, mentioned it to him and I was very skeptical, so I turned to you all to set me straight! I appreciate it!

eg,

As the others have mentioned, DCC is not a good deal for the consumer. Unfortunately it's becoming more common in Europe, both with credit card transactions (hotels, restaurants) as well as ATM's. I encountered it several times on my trip last year, and I always try to be vigilant to avoid it.

You may enjoy reading this article. Although it's from Australia, it applies to all those using foreign currency in Europe......

http://www.smh.com.au/business/banking-and-finance/dynamic-currency-conversion--robbery-by-choice-20150329-1ma77q.html

Ken - great article - very informative! Thank you for sharing. I bet the person that told my husband about this, didn't realize all of this.

Your card will always be charged in dollars (or whatever the currency of the country your card issuer is in) by the credit card networks (Visa, MasterCard, American Express) at a very favorable rate to you. That is, you see the transactions in USD or whatever you get billed in by the credit card company. Your bank may add fees and other service charges which can be up to 5% and $5 per transaction (maybe more depending on your bank).

The offer "for you convenience" to do the conversion by the merchant or ATM is really only for their convenience. They use a rate that gets them more money, plain and simple. There is really no limit on what that rate can be, but most stick within a few percentage points of what the official interbank rate is. They don't want to appear too greedy, after all.

The worst part of the DCC is that even though the transaction is pre converted to USD (or whatever your home currency is) your bank still treats it as a foreign transaction and charges their fees anyway. So not only are you losing money at the point of sale, you pay an even higher amount in fees since the percentage is based off of the amount of the transaction that reaches your bank, not the actual cost of the item or amount you are withdrawing at the ATM.

Some say they appreciate knowing what they are paying right away. I would rather save the excessive fees and do the math myself.

The same goes for paying the hotel bill by credit card: always request that it be done in euros.

Is there a way to see my bill in dollars without approving DCC payment?

Travelling Woman "Is there a way to see my bill in dollars without approving DCC payment?" - No, at least not before you approve the transaction. The currency conversion is done by the credit card company AFTER they have received the transaction, and any "foreign use" or other fees are added by your bank after that. Both are calculated some minutes or hours after you have left the shop/restaurant, so unless you have a time machine, it is not possible to find out at the time.

This is the "need" DCC is fulfilling, people who are unsure about currencies feel more comfortable seeing an amount in their own currency. In reality they have already been overcharged by an inflated exchange rate, and their bank will still add "foreign use" or "out of network" fees on top, so they still will not see the final amount.

The best solution is to learn the value of the local currency, so you know if you are being overcharged.

P.S. It is not just US-Americans that get hit by DCC. A British card used in Spain, or a Swiss card in France will also be "offered" DCC, and I have read the foreign cards in the USA are also offered DCC.

I don't get it. Spain and France also use euros. Why would DCC be offered to Spanish and French travelers?

Travelling Woman, but they don't use Euros in Britain or Switzerland. A British card used in Spain or France will be offered to pay in British Pounds (DCC), and a Swiss card will be offered Swiss Franks. Similarly a French or Spanish card in the UK will be offered Euros instead of pounds - all DCC rip-offs.

And if a Spanish or French traveler was in the US, they could be offered DCC for the USD transactions they are doing here so they see the amount in Euros when paying. DCC is not limited to US travelers in Europe, it can happen anywhere in the world.

And no, it is not possible to see the exact amount you will be charged in USD when you buy something in a foreign country. Even DCC can be only an approximation depending on how quickly the merchant actually settles their daily transactions. The best option if you really need to know what things will cost in USD, or whatever your local currency is, is to check the exchange rate before you set out in the morning and use a calculator to multiply out to get a close approximation of each transaction. My approach is that it costs what it costs and if the price seems high, I will go elsewhere to see if I can find what I am looking for at better price -- no matter what the currency is.

@Travelling Woman, if you set alerts on your credit card to email you on all foreign transactions, you will see the USD amount very quickly -- usually within minutes.

Or you can do some quick math in your head and you'll be near enough for jazz.

Just returned from two weeks in Spain. In every case at my hotels, they asked if I wanted it charged in euros (actually, they said, "Euros, right?" as if it should be the natural choice that it is). No ATMs that I encountered even asked about it. I chose English, and withdrew euros, no questions asked.

I've been in Italy for two weeks. After checking out of 3 hotels, only one asked if I wanted to have the charge on my card be in euros or dollars. Of course I said euros. I'm here one more week and have 3 more places to pay for. It will be interesting to see what they propose.