Am I supposed to choose Euros or dollars when using a credit card?

[KKB]

My lack of sleep getting here has my brain muddled…

thx

[markeb]

Always choose the local currency. Let your bank do the conversion.

[wowzz]

Assuming you are using a US card in Europe, always choose the Euro option (or whatever the local currency happens to be)

[styme123]

I always heard that but was wondering why? It's the price your paying converting into US dollars when your paying anyway? Like if the price is 5 euro won't I pay $5.50 in the end anyway? 

[wowzz]

1 minute ago, styme123 said:

I always heard that but was wondering why? It's the price your paying converting into US dollars when your paying anyway? Like if the price is 5 euro won't I pay $5.50 in the end anyway? 

If you choose $, the company handling the card transaction will impose a worse fx rate than your card company. 

In the scale of things, it might only be a few cents on a €5 purchase - $5.60 rather than $5.50, but over the course  of a holiday,  if you spend a significant amount, the difference can add up. 

You also need to use a cc that allows fee free foreign currency transactions.

[CruiserBruce]

8 minutes ago, styme123 said:

I always heard that but was wondering why? It's the price your paying converting into US dollars when your paying anyway? Like if the price is 5 euro won't I pay $5.50 in the end anyway? 

Because if you let the vendor (as opposed to the banks) do the exchange, the rate is usually really bad, and there may be additional fees. If you let the bank/credit card company do the exchange, its usually at the "bank to bank" rate, which is the best rate you can get.

[Globaliser]

16 minutes ago, wowzz said:

You also need to use a cc that allows fee free foreign currency transactions.

 

This maximises the benefit of accepting the charge in the merchant's currency. But the FX rates usually imposed by the merchant if you choose to pay in your own currency mean that you will often pay more that way even if your credit card is one on which you pay a typical 2.5% - 3.0% FX fee. So I would take the charge in the merchant's currency even if I'm using a card on which I have to pay an FX fee.

[wowzz]

22 minutes ago, Globaliser said:

 

This maximises the benefit of accepting the charge in the merchant's currency. But the FX rates usually imposed by the merchant if you choose to pay in your own currency mean that you will often pay more that way even if your credit card is one on which you pay a typical 2.5% - 3.0% FX fee. So I would take the charge in the merchant's currency even if I'm using a card on which I have to pay an FX fee.

So, unless you have a fee free credit card,  are you saying that you should accept the merchant fx rate and pay in your own currency ?

 

 

[Globaliser]

35 minutes ago, wowzz said:

So, unless you have a fee free credit card,  are you saying that you should accept the merchant fx rate and pay in your own currency ?

 

No. Whether the card is fee-free or fee-paying (assuming a typical FX rate), I'd take the charge in the merchant's currency. If I'm visiting the eurozone (as in this discussion) and the € / EUR is the merchant's currency, I'd take the € / EUR charge. But obviously, this works out even better if the card is FX fee-free.

[styme123]

16 minutes ago, Globaliser said:

. But obviously, this works out even better if the card is FX fee-free.

yeah my credit cards are FX free. I didn't realize there were other fees involved. I thought it was a straight conversion and that was it. 

[CruiserBruce]

1 hour ago, styme123 said:

yeah my credit cards are FX free. I didn't realize there were other fees involved. I thought it was a straight conversion and that was it. 

There are essentially 3 different ways using your home currency at the business can increase your costs...not all these happen every time, but they happen pretty frequently in the situations where the customer choses the home currency rather than the local currency.

 

First, there are poor exchange rates. Just a way for the business, or even the bank the business uses to make a profit on the exchange. Second, fees charged by the business to do the exchange, often not disclosed. More profit for the business. Lastly, bank or other related fees.

[wowzz]

3 hours ago, Globaliser said:

 

No. Whether the card is fee-free or fee-paying (assuming a typical FX rate), I'd take the charge in the merchant's currency. If I'm visiting the eurozone (as in this discussion) and the € / EUR is the merchant's currency, I'd take the € / EUR charge. But obviously, this works out even better if the card is FX fee-free.

My card is fee free. The fx rate used is the interbank rate. How can it possibly be better to take the merchant fx rate?

Every financial advisor that I have read advises that a fee free card should be used, and you should decline the offer to convert. You seem to be suggesting that they are all wrong.

[CruiserBruce]

Just now, wowzz said:

My card is fee free. The fx rate used is the interbank rate. How can it possibly be better to take the merchant fx rate?

Every financial advisor that I have read advises that a fee free card should be used, and you should decline the offer to convert. You seem to be suggesting that they are all wrong.

You are missing the point about making the purchase in the merchant's currency (when the credit card/bank does the conversion) versus the merchant doing the exchange (and making the purchase) from YOUR currency to the merchants currency. If the merchant does the exchange, there will be poor exchange rates and possibly merchant's fees, even if your credit card doesn't charge fees. Its the merchant adding on costs.

[wowzz]

Just now, CruiserBruce said:

You are missing the point about making the purchase in the merchant's currency (when the credit card/bank does the conversion) versus the merchant doing the exchange (and making the purchase) from YOUR currency to the merchants currency. If the merchant does the exchange, there will be poor exchange rates and possibly merchant's fees, even if your credit card doesn't charge fees. Its the merchant adding on costs.

In which case, it makes it even more important to always choose the "native" currency, never accept a switch to your home currency. 

[CruiserBruce]

Just now, wowzz said:

In which case, it makes it even more important to always choose the "native" currency, never accept a switch to your home currency. 

Agree.

[wowzz]

3 minutes ago, wowzz said:

In which case, it makes it even more important to always choose the "native" currency, never accept a switch to your home currency. 

 

2 minutes ago, CruiserBruce said:

Agree.

Although @Globaliser would argue the opposite, for reasons that I still do not comprehend.

[CruiserBruce]

3 minutes ago, wowzz said:

 

Although @Globaliser would argue the opposite, for reasons that I still do not comprehend.

No. @Globaliser is saying take the charge in the merchant's currency. Globalizer says in post #9 that if in the euro zone, take the charge in euros.

[wowzz]

1 minute ago, CruiserBruce said:

No. @Globaliser is saying take the charge in the merchant's currency. Globalizer says in post #9 that if in the euro zone, take the charge in euros.

Yes - doh ! 

For some reason I totally misunderstood his post  .

Apologies to all. Just off to eat an enormous portion of humble pie.

[gnome12]

5 hours ago, Globaliser said:

 

This maximises the benefit of accepting the charge in the merchant's currency. But the FX rates usually imposed by the merchant if you choose to pay in your own currency mean that you will often pay more that way even if your credit card is one on which you pay a typical 2.5% - 3.0% FX fee. So I would take the charge in the merchant's currency even if I'm using a card on which I have to pay an FX fee.

I have read (though I haven't confirmed it personally) that banks consider it a foreign transaction even if you choose the currency of the card rather than the local currency. So you might be paying a lousy exchange rate PLUS 2.5%-3%.

[Harters]

The advice to choose the local currency applies also to  withdrawals from ATMs, as well as purchases. As mentioned the conversion will be at the agreed interbank rate, rather than a rate dreamt up by the merchant to suit their own profits.

[John Bull]

Good, we're all singing from the same song-page - always have your card charged in local currency.

And check that that's the case before you swipe, PIN or sign because some merchants will try it on 😡.

 

There is also the advantage that the price on the POS card-reader should be the same as the billboard, the price-tag, the menu, the check, and what you were told.

 

And the same rule applies to settling on-board accounts on cruise ships, if for example you're on a US ship & the card you registered isn't a US one.

When your on-board statement is presented, usually on the last full day, you'll be offered the opportunity to be charged in your own currency rather than ship's currency "for your convenience". DECLINE that offer, ships conversion rates are never as good as your card supplier's rate, always settle on-board accounts in ship's currency. 

 

JB 🙂

[Globaliser]

11 hours ago, gnome12 said:

I have read (though I haven't confirmed it personally) that banks consider it a foreign transaction even if you choose the currency of the card rather than the local currency. So you might be paying a lousy exchange rate PLUS 2.5%-3%.

 

No, this shouldn't happen - and it's not happened to me on the (mercifully few) occasions when I've had to accept the charge in the currency of my card.

 

I have heard of it happening in rare circumstances. From memory, I think that one example was a merchant that offered to charge in € or £. But because of the merchant's location (or the location of their payment processor), the £ charge happened to be processed in GIP rather than GBP. The Gibraltar pound is pegged and freely convertible to the British pound at 1:1, but it is technically a different currency and is coded as such (ie as GIP rather than GBP). Some UK credit card companies therefore treated the charge as a foreign currency transaction, and charged the FX fee in addition to the GIP charge, even though the customer was expecting a GBP charge of the same amount with no FX fee.

 

If that were to happen, the customer would be well advised to complain.

[Harters]

That's a handy bit of info, G.

 

We're visiting Gib on our upcoming cruise  and would have assumed that it'd be OK just to use our normal Natwest card. Must remember to use our Halifax Clarity and pay in Gib currency.

[soccermom4]

I saw a new one yesterday.  In the US - paying for transport from Heathrow to hotel using a British transport company.  Price was quoted in pounds.  The payment website was through PayPal and allowed either PayPal's conversion to dollars, or using pounds and having bank convert.  I chose the latter, but was surprised by the choice.  At least PayPal told you what rate they would use.

[ExpatBride]

Always pay in the local currency. I have a multi-currency card with Wise, which gives pretty good exchange rates. The majority of my money is in DKK but I often have need to use EUR, GBP, and USD, and I find the exchange rates to be fair.