Dynamic currency conversion
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=== Card usage fees ===
=== Card usage fees ===
[[File:SelfcheckoutRandall'sHoustonTX.jpg|thumbnail|A self-checkout machine in a [[Houston]] supermarket]]
[[File:SelfcheckoutRandall'sHoustonTX.jpg|thumbnail|A self-checkout machine in a [[Houston]] supermarket]]
−
Transaction fees can be charged by the
merchant,
the
ATM-owner
, the
bank
that
issued
the
card
, and
in
-
effect
through
an
unfavorable
exchange rate
.
+
Transaction fees can be charged by the
bank
or
institution that issues your card
, the
company
that
clears or processes
the
transaction
, and
the merchant or the ATM
-
owner
where
you
use your card. These fees can be fixed, a percentage of the amount, or built into an
exchange rate
- or a combination of these.
−
* Most card issuers will charge a foreign transaction fee of up to 4% of the transaction amount every time you make a purchase or cash withdrawal in a foreign country. However, in the United States, several issuers (including Capital One, First Republic, Marshall & Isley, PNC Bank, Webster Bank, and many credit unions) offer cards with low or no foreign transaction fees. This can save you a considerable amount on any extended travel. If you don't have such a card, you might apply for it before traveling. It can take up to 3 weeks to receive your card after you request it.
+
−
*
You
can
find the
[https
:
//usa
.
visa
.
com/support/consumer/travel-support/exchange-rate-calculator
.
html
VISA]
or
Mastercard
exchange
rates
on
their
website
.
As
above,
your
bank
may
charge a fee
on
top
of
this
rate
.
+
Most
'''card
issuers will charge a foreign transaction fee''' of up to 4% of the transaction amount every time you make a purchase or cash withdrawal in a foreign country. This fee may be charged even if the transaction is in your home currency but with a foreign bank. Be careful purchasing other countries on the web, where the currency amount may be displayed in your home currency, but you still may pay foreign transaction fees. Try to
find
an issues that doesn't charge this fee or has a low fee. In
the
United States
:
Capital One, First Republic, Marshall & Isley, PNC Bank, Webster Bank, and many credit unions
.
In the U
.
K, Halifax
.
In Australia, 28 Degrees
or
Citbank
Plus.
This can save you a considerable amount
on
any
extended travel
.
Card
issuers
may
also
charge a
foreign ATM usage fees as a fixed
fee
.
Check your banks fees well in advance
of
travel, and consider applying for a new card with lower fees for travel. Allow plenty of time for the application and to receive the
card
.
−
* The exchange rate applied to a transaction is usually the rate on the transaction processing date, that can vary from the purchase date. Therefore, unless currency rates are fixed, it is impossible to know exactly what exact exchange rate will be charged until the transaction is posted to your account. Any exchange rate fluctuation may be in your favour, or against you.
+
−
*
In
general
,
in
addition
to
the
foreign
transaction
fees,
American Express charges an exchange rate that is 0.0% to 0.5% worse than the rate charged by VISA and MasterCard
,
and
the
latter
may
charge
a rate that
is
0
.
0%
to
0.5%
worse
than
the
interbank
rate
quoted
on
most
currency
conversion
websites
.
+
The
processing
company - Visa
,
Mastercard,
American
Express, etc - build a small margin into
the
exchange
rate
they convert at. You can find the exchange rate that [https://usa.visa.com/support/consumer/travel-support/exchange-rate-calculator.html VISA] or Mastercard exchange rates on their website.
American Express charges an exchange rate that is 0.0% to 0.5% worse than the rate charged by VISA and MasterCard
.
Generally
the
rate
is
around .5% to 1% from the midrate. The exchange rate applied to
a
transaction is usually the
rate
on the transaction processing date,
that
can
vary from the purchase date
.
Therefore, unless currency rates are fixed, it is impossible
to
know
exactly
what exact exchange rate will be charged until
the
transaction is posted to your account. Any exchange
rate
fluctuation
may
be
in your favour, or
against
you
.
−
** Nonetheless, '''nearly always, the total cost of obtaining foreign currency by ATM will be substantially less than that charged when offering your home currency to a currency exchange service.'''
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−
*
If
you
are staying for
a
long
time
in
a
single
country,
you
may
save
on
fees
by
opening
a
local
bank
account
and
obtaining
a
local
ATM
card
(as
discussed
for
Japan
above).
You
will
usually
need
a
local
mailing
address
and
a
valid
residence
permit
to
do
so
.
+
'''ATM
owners
can
charge
a
fixed
fee'''
to
use
your
card
at
an
ATM.
This
will
usually
be
written
on
the
ATM
or
displayed
on
the screen.
Check
for
partnerships
with
your
card
issuer
to
reduce
this
fee.
Consider
larger
withdrawals
to
reduce
the
impact
of
fixed fees
.
−
* If you are faced with a situation where a PIN is required (such as certain unmanned train ticket kiosks in [[Europe]]), it is certainly better to use a debit/ATM card than a credit card, as PIN-based transactions with a US credit card may incur cash advance fees/loans (in addition to foreign exchange fees).
+
−
* Foreign currency transaction fees
may
be
charged
if
the merchant
uses
a
foreign
bank,
even
if
the
transaction
is
made
in
your
home
currency
.
For
example,
when
making an online purchase on a foreign airline webpage, you may
be
charged
a
foreign transaction
fee
even if the purchase is made in your home currency. Some airline webpages may have
a
"local"
website
for
every country. This can just be a "skin" over their standard webpage
, and
the
transaction may still
be
processed
as
a
foreign
transaction
.
If
in
doubt,
try
to
use
one
of
the
cards
mentioned
above
that have small or no foreign transaction fees
.
+
'''Merchants
may
charge
a
surcharge
or
require
a
minimum
purchase'''.
Local
laws
can
affect
how
common
merchant
surcharges
are
.
Merchant
surcharges
can
be a
fixed
fee
or
a
percentage
of
the
transaction
, and
they
should
be
advised
at
point
of
sale
.
These
can
vary
between
card
types,
and
between
debit
and
credit
cards
.
−
* In lieu of a surcharge, merchants may require a minimum purchase of up to US$10 to use either a credit or debit card. This is to cover the per-transaction fees that the owner of the credit card terminal charges the merchant. These minimums are more prevalent in smaller shops; stores with branches across a wider geographical area normally do not have impose a minimum.
==== Dynamic currency conversion ====
==== Dynamic currency conversion ====
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When you are paying by credit card, some '''merchants will offer to convert your transaction into your home currency'''.
..aka
Dynamic Currency Conversion (DCC). If this is offered, '''you should decline''' it; they will charge
an
exorbitant
exchange rate.
+
When you are paying by credit card, some '''merchants will offer to convert your transaction into your home currency'''.
This is called
Dynamic Currency Conversion (DCC). If this is offered, '''you should decline''' it; they will charge
a
higher
exchange rate
than your card will give you pay in foreign currency
.
* Always check your receipt, and if you see anything involving your home currency in a country that doesn't use that currency, ask the merchant to redo the transaction in the local currency. If the merchant insists that the conversion is automatic, report transaction to your credit card issuer. VISA requires the merchant to disclose the fee and must provide the consumer with a choice of getting the bill in the customer's home currency or the local currency.
* Always check your receipt, and if you see anything involving your home currency in a country that doesn't use that currency, ask the merchant to redo the transaction in the local currency. If the merchant insists that the conversion is automatic, report transaction to your credit card issuer. VISA requires the merchant to disclose the fee and must provide the consumer with a choice of getting the bill in the customer's home currency or the local currency.
−
* Merchants may try to convince you that paying in your home currency will avoid foreign transaction fees, but that is because the fees are priced into the currency exchange rate used.
* Some credit card terminals will show you an amount in your home currency and ask you to accept or decline the amount. Declining the home currency option will process the transaction in the local currency, which means your bank/card issuer will do the conversion for you.
* Some credit card terminals will show you an amount in your home currency and ask you to accept or decline the amount. Declining the home currency option will process the transaction in the local currency, which means your bank/card issuer will do the conversion for you.
* Some cash machines are also known to use dynamic currency conversion, much like credit cards at the point of sale, and should be declined. The machine will ask you if you would like the amount in your home currency or local currency; even though you will always receive the local currency. If you decline (cancel), some ATM machines are programmed to automatically cancel the transaction, which is to say that the bank is forcing you to accept dynamic currency conversion. Your best choice is to just find another ATM that doesn't use dynamic currency conversion.
* Some cash machines are also known to use dynamic currency conversion, much like credit cards at the point of sale, and should be declined. The machine will ask you if you would like the amount in your home currency or local currency; even though you will always receive the local currency. If you decline (cancel), some ATM machines are programmed to automatically cancel the transaction, which is to say that the bank is forcing you to accept dynamic currency conversion. Your best choice is to just find another ATM that doesn't use dynamic currency conversion.
+
* Merchants may try to convince you that paying in your home currency will avoid foreign transaction fees. Instead you will pay a higher exchange rate, and you may still pay the foreign transaction fees with your card issuer that often charges these fees on foreign transactions regardless of the currency used.
=== Prepaid cards ===
=== Prepaid cards ===