We're in the final preparation stages for our third trip to Europe and second to Italy. Yesterday, I notified my back-up credit card bank (Visa charges 1 percent USD conversion fee) of our impending venture. The bank agent recommended that when I use this credit card to pay for a purchase, I should request that the merchant convert my purchase from Euros to USD, thereby saving me the conversion fee. Has anyone ever heard of or used this method to save the USD conversion fee? I appreciate your reply in advance.
Posted by
Green Bay
21377 posts
It's called dynamic currency conversion and is usually not advantageous to you. Instead of the 1 % your card charges (not too bad) it could be 3 %. I decline this option unless I'm day dreaming. The Swiss are all over this one because they make more money.
Posted by
Virginia, USA
5906 posts
Your bank agent is giving you bad advice. Dynamic currency conversion (where you are charged in USD rather than local currency) is likely to cost far more than 1%. I'd suggest you read this article which explains the practice
http://www.cardhub.com/edu/dynamic-currency-conversion/
Also read your credit card terms to see if the 1% fee is a foreign transaction fee or a currency conversion fee. Many U.S. banks charge a foreign transaction fee; even if you pay in dollars, you are charged the fee if the transaction originates outside of the U.S.
Posted by
Oak Park, Illinois
4535 posts
Agree with the others. Even if you do save the 1% from your bank, the merchant will charge you more for the "convenience" of converting to USD. ATM machines will sometimes ask you the same question.
Normally, conversion is done at the interbank rate. When you allow dynamic conversion by the merchant, you are allowing them and their bank to set their own exchange rate; and this is where they can make some extra money.
Posted by
Wichita
831 posts
PNW,
Laura is correct. Your bank agent is incorrect. See http://usa.visa.com/personal/card-benefits/travel/exchange-rates-faq.jsp
Posted by
Bloomington, IL, USA
9371 posts
Bad advice! Always charge in the local currency, not dollars.
Posted by
OP
Pacific Northwest, USA
13 posts
Grazie for all the excellent advice. I thought it sounded too good to be true.
Posted by
Knoxville, TN, USA
7209 posts
Get yourself a Capital One credit card and forget about all conversion fees...none, zero, zilch.
PS - you usually don't have to ask merchants to convert into US Dollars because they're all too happy to do it for you w/o asking. You usually have to ASK to NOT have it converted.
Posted by
Seattle, WA, USA
7737 posts
I have to disagree with Tim when he says: "PS - you usually don't have to ask merchants to convert into US Dollars because they're all too happy to do it for you w/o asking. You usually have to ASK to NOT have it converted."
That may be true in some countries such as Mexico, but I've never had that happen in Italy the four times we've been.
Posted by
Boston
1816 posts
Under EU rules you must give permission to convert a charge from Euro to USD. If it is presented as USD, make them redo it.