Everything You Need to Know about Dynamic Currency Conversion
International travel is expensive. Most of us try to cut corners any way we can. That’s why you absolutely must decline dynamic currency conversion services any time they’re offered for your credit card purchases.
What is Dynamic Currency Conversion?
Dynamic currency conversion (or DCC) is a service provided by many merchants who cater to international clientele (either in person or online). The merchant will offer cardholders the option to pay in the local currency or the cardholder’s currency.
For example, if you visit a restaurant in London, you will be offered the opportunity to pay in British pounds or US dollars. For an American traveler, it may be tempting to process the transaction in dollars. You won’t have to do all the complicated math to figure out exactly what dinner costs; the sales receipt will tell you.
However, this convenience comes with a very high price tag. While merchants politely convert local currencies for you, they also charge a very steep fee for their services. Using DCC to change currencies can cost between 1% and 7% of the total sale.
If you are constantly converting local currencies to US dollars courtesy of DCC, your additional fees will quickly add up. The worst part is, you won’t know about all the extra money you spent until you get your credit card statement.
The dynamic currency conversion fee is in addition to a foreign transaction fee your credit card company may charge.
Alternatives to Dynamic Currency Conversion
Dynamic currency conversion is an additional travel expense you don’t need to pay. If you aren’t letting the merchant tally the total cost of the sale though, you’ll need to do it yourself. Performing complex math on the spot can be intimidating; you’ll probably make at least a few errors while doing mental math conversions during your trip.
There is a better option: download a currency conversion app. Before you leave home (and while you still have access to wifi), program the app with the currencies you’re going to be using. Then, when a street vendor quotes a price for that nifty souvenir you absolutely must have, you can quickly calculate how much it will cost.
Saving Money Online
Dynamic currency conversion can be used for any international credit card transaction. You also need to be on the lookout when shopping online.
Read the fine print of the checkout process. The merchant might automatically convert the total sale amount for your convenience. Look for something along the lines of “other conversion options” or “billed in the currency of the seller.”
If You Get Scammed
Dynamic currency conversion is a money making scheme for the merchant, not the credit card network. In an attempt to protect the consumer, both Visa and MasterCard have strict rules about what the merchant can and can’t do. If the merchant chooses to break these rules and you end up getting scammed, you are entitled to a refund.
Here are the rules the merchant is supposed to follow:
- The merchant must make dynamic currency conversion an option. They cannot force you to use the service. You should always have the choice to pay in the local currency.
- The merchant must make it clear you are choosing to use DCC and that an additional fee will be added to the transaction.
If dynamic currency conversion was used without your permission, you are entitled to a refund for the purchase. However, most cardholders don’t know they’ve been charged the additional fee until they get home and review their credit card statement. At that point, communicating with the merchant isn’t geographically ideal. And if the DCC violation was part of an internet fraud attempt, it might be impossible to track down the contact information for the merchant’s customer service department.
Technically, you might be able to file a credit card payment protection refund (known as a chargeback) through the bank. However, you’ll have to file a lot of paperwork and it could take up to six months to complete the process. That’s a long time to wait for money that is rightfully yours.
It is much easier to let eConsumer Services® get a refund on your behalf. Just fill out the form to the right and we should be able to obtain your refund in just a couple days.
Traveling is supposed to be a relaxing, enjoyable experience. Don’t let all that pleasure evaporate the minute you see your credit card statement. Decline DCC and save some money.