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

[Bob++]

On 5/4/2023 at 10:29 PM, Harters said:

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.

It is usually a bad idea to use a credit card to withdraw cash. The CC company will treat it differently to purchases and start charging interest immediately. Almost every vendor, even small ones, accept 'tap and go' credit cards these days, so apart from cash tips which can be paid in Dollars, you don't really need cash at all.

[Bob++]

On 5/5/2023 at 11:02 AM, Harters said:

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.

I just got back from Gib. Note that their Pounds are a straight swap for UK Pounds and everyone is happy to take GBP in payment. This doesn't work the other way around, so if you bring any back, you will have to pay a transaction fee to change them.

[Harters]

25 minutes ago, Bob++ said:

The CC company will treat it differently to purchases and start charging interest immediately.

But for the small amount involved in ,say, a three week holiday in Spain, I'm not really fussed. It's usually just taxis or a drink in a bar which doesnt take cards.

[CruiserBruce]

25 minutes ago, Harters said:

But for the small amount involved in ,say, a three week holiday in Spain, I'm not really fussed. It's usually just taxis or a drink in a bar which doesnt take cards.

There can be significant fees for cash advances on a regular credit card. Cash advances are usually our very last option to be considered.

[Harters]

24 minutes ago, CruiserBruce said:

There can be significant fees for cash advances on a regular credit card.

Even if we used our normal credit card, the amount would be tiny, simply because we're not withdrawing much. However, we have a different card which we only use overseas which reduces it further (less than 1%).  Almost certainly, the greater cost is the usage charge in Spain, levied by most banks which operate ATMs. It can vary from about €1 to €5 per withdrawal. I think only one,  Banca March, is still fee free.

Edited May 6, 2023 by Harters

[gnome12]

7 hours ago, soccermom4 said:

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.

I have seen that one with PayPal for a while now. Same advice as credit card; choose the local currency. 

[wowzz]

19 hours ago, Harters said:

Even if we used our normal credit card, the amount would be tiny, simply because we're not withdrawing much. However, we have a different card which we only use overseas which reduces it further (less than 1%).  Almost certainly, the greater cost is the usage charge in Spain, levied by most banks which operate ATMs. It can vary from about €1 to €5 per withdrawal. I think only one,  Banca March, is still fee free.

We use  Santander Zero card. Free withdrawals from Santander ATMs.

[fruitmachine]

For the record - it's not the merchant that is charging the fee if you choose to pay in your card's currency, but the Merchant Acquirer  This is the company that's providing the card machine to the merchant.  Many times it's a bank or a bank subsidiary, but they are able to set the exchange rate they choose.  Unlike your own credit card, where you know in advance the FX fees (if any) you have little idea on the competitiveness of that rate in the few seconds you have before pressing the button on the PoS machine.
 

Edited May 9, 2023 by fruitmachine

[Twickenham]

16 hours ago, fruitmachine said:

 Unlike your own credit card, where you know in advance the FX fees (if any) you have little idea on the competitiveness of that rate in the few seconds you have before pressing the button on the PoS machine.

 

Interesting real-life experience I had a few years ago checking out of a hotel in Barcelona. While the bill was in Euros, they automatically did the dynamic conversion thing and charged my credit card in CAD. When I saw that I insisted they reverse the charge and put through a new charge in Euros, which after a bit of protest they did. So my credit card statement had 3 transactions, the initial charge in CAD, the reversal, then the charge in Euros, with the conversion into CAD done at the CC's exchange rate. The initial charge was a good CA$40 more than the charge in Euros converted - on a bill of a little over 200 euros.

[John Bull]

8 hours ago, Twickenham said:

 

Interesting real-life experience I had a few years ago checking out of a hotel in Barcelona. While the bill was in Euros, they automatically did the dynamic conversion thing and charged my credit card in CAD. When I saw that I insisted they reverse the charge and put through a new charge in Euros, which after a bit of protest they did. So my credit card statement had 3 transactions, the initial charge in CAD, the reversal, then the charge in Euros, with the conversion into CAD done at the CC's exchange rate. The initial charge was a good CA$40 more than the charge in Euros converted - on a bill of a little over 200 euros.

 

 

That's precisely why we hammer on about folk having their card charged in local currency (card issuers' excellent exchange rate) and not the card's currency (at the mercy of whoever does the conversion).

 

And also why we now find that we have to advise folk to check the currency before swiping, PINing or signing, because some POS machines (including that hotel) automatically switch to the currency of the card, which has to be pointed out to the vendor and switched to local currency - the same price as the tab or price label.

 

JB 🙂

[MAVIP]

On 5/10/2023 at 2:32 PM, John Bull said:

 

 

That's precisely why we hammer on about folk having their card charged in local currency (card issuers' excellent exchange rate) and not the card's currency (at the mercy of whoever does the conversion).

 

And also why we now find that we have to advise folk to check the currency before swiping, PINing or signing, because some POS machines (including that hotel) automatically switch to the currency of the card, which has to be pointed out to the vendor and switched to local currency - the same price as the tab or price label.

 

JB 🙂

You are right to tell everybody every time you have the possibility, because shopkeepers keep trying.  (recently in Tunis rugsellers kept saying that they were not allowed to give a price in Tunesian valuta! I tried to warn USA passengers who were busy buying, but I talked to deaf ears.)

[fruitmachine]

On 5/10/2023 at 1:32 PM, John Bull said:

 

 

That's precisely why we hammer on about folk having their card charged in local currency (card issuers' excellent exchange rate) and not the card's currency (at the mercy of whoever does the conversion).

 

And also why we now find that we have to advise folk to check the currency before swiping, PINing or signing, because some POS machines (including that hotel) automatically switch to the currency of the card, which has to be pointed out to the vendor and switched to local currency - the same price as the tab or price label.

 

JB 🙂

I'd be very surprised if there was anything "automatic" about it, but would agree entirely that you need to check that the retailer hasn't just pressed the "card currency" button before handing you back the terminal.  Another reason not to part with your card - the security procedures are designed by EMV so it shouldn't need to leave your hand

With contactless, it can't be charged in anything but the local currency, as the machine doesn't know in advance your card currency, and there is no interaction after touching your card to the machine.  Perhaps this is a good reason to use Google/Apple Pay contactless with it's absence of a standard transaction-value limit?

[Host Bonjour]

On 5/10/2023 at 8:32 AM, John Bull said:

That's precisely why we hammer on about folk having their card charged in local currency (card issuers' excellent exchange rate) and not the card's currency (at the mercy of whoever does the conversion).

 

And also why we now find that we have to advise folk to check the currency before swiping, PINing or signing, because some POS machines (including that hotel) automatically switch to the currency of the card, which has to be pointed out to the vendor and switched to local currency - the same price as the tab or price label.

 

 

This sounds a lot like the POS equivalent of standalone ATMs inside shops that charge very high fees for cash withdrawal because they're not associated with any bank.

 

Perhaps these charging terminals have devised the currency choice option knowing that the currency differential, from charging in user's home currency at the time of sale at a less than optimal exchange rate (the card issuer would get the best exchange rate, for example, Chase, being a major bank) and then pocketing the difference when the user or owner of the terminal then does the exchange at their bank from the customer to local currency, and pockets the difference, with either a percentage going to the merchant as a commission or bonus.

 

It would offset the cost that credit card companies charge merchants for accepting cards, maybe even help them clear a little more depending on the economy and spread between currencies although one would hate to be the bookkeeper for all of that. 

 

But my guess is that with these "you can pay in your home currency" options, one or more parties to the transaction are making money on that rate spread. There's always an angle. 

 

Colleen

[gnome12]

PayPal has started automatically switching to Canadian dollars if I make a purchase in $US. I have learned that I have to switch it back to charge me in $US. 

[pink845]

What is this "merchant fee" mentioned in one of the posts above?  We have both usd and cdn credit cards.  On ships settling account  usd card always use as that is ship currency and it is cleaner.  There is no merchant fees being charged in Canada yet. There is talk of it coming. So prior to buying items in Europe is that something we should be asking the vendor?  Will use Cdn card and charge local currency.

[John Bull]

10 hours ago, pink845 said:

What is this "merchant fee" mentioned in one of the posts above?  We have both usd and cdn credit cards.  On ships settling account  usd card always use as that is ship currency and it is cleaner.  There is no merchant fees being charged in Canada yet. There is talk of it coming. So prior to buying items in Europe is that something we should be asking the vendor?  Will use Cdn card and charge local currency.

 

Hi,

 

I'll hazard a guess that you're referring to Post #33

(when referring to previous posts on long threads they're easier to find if you use the "quote" button to repeat the quote, or mention the post number - top right of every post)

 

Merchant fees are only a matter between the merchant and the card issuer - for decades in the UK, the EU, the USA, Canada and most of the world it's been illegal to charge customers differently according to their payment method, the merchant has to suck up whatever card fees they're charged (there are exceptions for business transactions).

 

Being an old fogey, I remember the early days of card payments. When buying something expensive - kitchen appliances, furniture, even cars - we always asked "do you accept payment by card". A "yes" answer then led to "how much discount will you give me for cash?"🙂.

So the law which now makes it illegal for merchants to charge a card fee actually has the negative effect of also making it illegal for them to give discounts for cash 😟.

 

In short you don't need to ask about card fees, you'll not be charged any in Europe.

So yes, using your Cdn credit card and being charged in local currency is the way to go. 

 

JB 🙂

PS To cover their card fees, all vendors in Tanzania charge about 5% extra to use a card. So when we booked a safari we paid about £100 by card to keep the safeguards of using a card, and the balance by credit transfer - card issuers are jointly liable for the entire cost of a purchase as long as a minimum portion is paid by card.

Edited May 29, 2023 by John Bull

[Globaliser]

2 hours ago, John Bull said:

PS To cover their card fees, all vendors in Tanzania charge about 5% extra to use a card. So when we booked a safari we paid about £100 by card to keep the safeguards of using a card, and the balance by credit transfer - card issuers are jointly liable for the entire cost of a purchase as long as a minimum portion is paid by card.

 

For clarity, this protection is provided by specific UK legislation covering UK credit cards, for transactions between specific minimum and maximum values. Consumer protection in other countries may differ.

[John Bull]

1 hour ago, Globaliser said:

 

For clarity, this protection is provided by specific UK legislation covering UK credit cards, for transactions between specific minimum and maximum values. Consumer protection in other countries may differ.

 

Thanks for that, G.

Certainly consumer protection is a feature of credit card transactions pretty-well world-wide, but specifically protection for an entire transaction if only part is paid by card is based only on experience with my (UK-issued) cards.

 

JB 🙂

[Cotswold Eagle]

16 hours ago, John Bull said:

for decades in the UK, the EU, the USA, Canada and most of the world it's been illegal to charge customers differently according to their payment method,

This is not strictly accurate, JB. Surcharges were only banned in EU under the second Payment Services Directive in early 2018 (and this still applies in the United Kingdom). They are legal in the US, other than in a handful of states, and in my experience still common in other parts of the world (I have no experience of Canada). 

[gnome12]

57 minutes ago, Cotswold Eagle said:

(I have no experience of Canada)

In Canada they have just been made legal. I have not yet experienced any merchant charging a surcharge, but they are out there now.

[Globaliser]

6 hours ago, Cotswold Eagle said:

This is not strictly accurate, JB. Surcharges were only banned in EU under the second Payment Services Directive in early 2018 (and this still applies in the United Kingdom).

 

And in the UK, payment surcharges were in fact banned for a very long time, then permitted (and widespread) for a number of years, and then banned again under the Directive.