Pay credit card charges in local currency

When paying by credit card in a foreign country, especially in the UK and some other European countries, you may be asked if you would like to be charged directly in US dollars (or Canadian, as the case may be). You should always refuse because this “service” comes with a hefty fee: about 3% of the transaction amount, in my experience.

If you pay with the local country’s currency (e.g., euros), your card will be charged based on the exchange rate for the day on which the transaction is posted to your credit card account — which is usually the following day or, if over a weekend or holiday, two or three days later. This means you won’t know the actual charge in dollars until you check your account a few days later or until you get your statement.

If you elect to pay directly in dollars, you know immediately what the exact dollar cost will be, of course, but, remember, you’re paying for this. On a $1,000 hotel bill, for example, you may pay around $30 for this privilege. The $30 is buried in the dollar amount charged, and they don’t tell you about it. It is on top of any other fees charged for the transaction.

Basically, it’s a rip-off. There is absolutely no benefit to paying this fee except a little advance notice of what the actual cost will be. You should know the exchange rate anyway, and if you’re on a budget, you can tell what the dollar cost will be to within a few cents.

The banks that get this fee rely on the gullibility of tourists who think that paying directly in the currency of their home country seems like a good idea but who aren’t told of the fee that will be charged.

Legally, the merchant is required to ask which currency you would prefer to pay with, but on two occasions in the UK I was not asked and the charge was processed in Canadian dollars.

On one occasion, I didn’t notice until I got home. In the other case, I noticed at the time, but the merchant said he had no way of reversing the transaction. I immediately started to call my credit card company to tell them to void the transaction because it was fraudulent (which it was). At that point, the merchant found a way to reverse the transaction. (Surprise!)

Again, while they are legally required to give you the option, they are not required to tell you about the fee.

DAVID SELLEY

Toronto, Ontario, CANADA