Dynamic Currency Conversion: Say What?
Q: I spent some time in Europe recently and noticed some merchants would charge me in U.S. dollars instead of the local currency. That seemed odd to me. What's this about? — M.T.
A. Welcome to the world of Dynamic Currency Conversion (DCC). While it sounds like something that requires the services of an electrician, it's actually a financial practice where a merchant settles the charge in your credit card's home currency rather than the currency of the country you're in.
Basically the exchange transaction is converted at the point of sale rather than weeks later. It's handy for expense accounts as you know the amount charged prior to receiving your statement.
On the other hand, there are fees included that may result in a less competitive exchange rate.
I recommend checking with your financial institution about credit card policies and the fees associated with currency exchange whether from an ATM or point of sale.
In addition, if you've never charged outside the U.S. or it's been a while, your bank may find your charges abroad suspicious and suspend your card until you contact them. Let them know of your travel plans ahead of time.
While DCC is becoming a common practice, especially in the hospitality industry, cardholders do have a choice.
The practice is not a mandate, but an option. Take a good look at your charge receipt before signing, if you have a preference.
A. Welcome to the world of Dynamic Currency Conversion (DCC). While it sounds like something that requires the services of an electrician, it's actually a financial practice where a merchant settles the charge in your credit card's home currency rather than the currency of the country you're in.
Basically the exchange transaction is converted at the point of sale rather than weeks later. It's handy for expense accounts as you know the amount charged prior to receiving your statement.
On the other hand, there are fees included that may result in a less competitive exchange rate.
I recommend checking with your financial institution about credit card policies and the fees associated with currency exchange whether from an ATM or point of sale.
In addition, if you've never charged outside the U.S. or it's been a while, your bank may find your charges abroad suspicious and suspend your card until you contact them. Let them know of your travel plans ahead of time.
While DCC is becoming a common practice, especially in the hospitality industry, cardholders do have a choice.
The practice is not a mandate, but an option. Take a good look at your charge receipt before signing, if you have a preference.
Care to comment below about your experiences?
Comments
Thanks for the heads up on DCC. I will be in Mexico next week.
I still use traveler's checks and sometimes (if convenient) I go to the local bank in the country I am in, and exchange US to their currency - especially for smaller amounts of cash.
Of course, this would not work well for larger purchases like buying business dinners.
Posted by: S.A. | June 22, 2007 4:48 AM