June 25, 2024

Are you planning a trip to Europe? Be on guard against a widely-used credit card currency exchange ploy.

The Points Guy travel site founder, Brian Kelly, revealed on Monday about a common dubious practice. This strategy, known as “dynamic currency conversion” (DCC), can potentially cost unsuspecting tourists hundreds or even thousands of dollars.

DCC occurs when overseas credit card readers present clients with an option to complete the transaction in US dollars (or their home currency) instead of the local ones like euros. However, these businesses almost always impose covert fees on the transactions — an information many travelers may not realize.

During his recent European trip, Kelly observed that most places gave him the option of choosing US dollars for payment. Describing his experience, he said he chose to pay by his US credit card for a 384 Euro charge rather than taking up an offer of $437. The card charged him only $416 thus saving him $20.

For accurate and quick exchange rates, he recommends using XE.com. He emphasized that many travelers often get daunted by such choices.

IATMs also follow similar tactics, displaying the amount in dollars in a more appealing green color, and the Euro rate in red. Kelly advises to be smart by making charges in local currency. The bank can then handle the exchange process and the transaction.

This underhanded technique has a history going back to the 1990s, and is labeled as a scam by the European Consumer Organisation as it prompts consumers to pay more for the benefit of viewing the price in the home currency. The organization further asserts that it’s nearly impossible for consumers to make an educated decision in such scenarios. Per the ECO, when payments are made in local currency, banks handle the conversion rate. However, with DCC, the coordinating merchant or service provider makes the conversion, often sneaking in a fee.

Visa also cautions its overseas clients about DCC strategies. Their customer guidance states clients should decline currency conversion offers that aren’t adequately detailed, and should report it to their card issuer. Visa clarified that accepting or refusing DCC won’t affect your ability for international purchases or cash withdrawals.

##### Travelling Nomad’s FAQs

###### What is the Dynamic Currency Conversion?
Dynamic Currency Conversion (DCC) is a strategy deployed by overseas credit card readers where they propose clients to pay in their home currency instead of the local ones like euros. This scheme often has hidden conversion fees.

###### How can I avoid falling prey to DCC?
Ensure to always pay in the local currency instead of your home currency. This lets your bank handle the transaction and conversion process. Utilize trustworthy sites like XE.com for quick and accurate exchange rates.

###### How can I report suspicious DCC encounters?
If you encounter a DCC offer that lacks full detail, or if you find undue pressure to select one currency over another, you should decline the offer and inform your card issuer about it.