Some shops and establishments abroad have started using a service called ‘Dynamic Currency Conversion’. If you opt to use this service when paying your bills with your UK based credit or debit card, you have the option of paying in the local currency or having the entire transaction amount converted into your home currency GBP immediately. This is called ‘Dynamic Currency Conversion’.
Benefits of ‘Dynamic Currency Conversion’:
The major benefit of ‘Dynamic Currency Conversion’ is that you will immediately know how much money you will have to pay in GBP for the bill that you have in foreign amount. Hence, you will be aware of the actual amount of expenses. Sometimes, this is very useful as you will know exactly where you stand with respect to your credit card expenditure limit and whether the transaction will exceed your credit card limit.
Paying in your home currency can be useful for knowing exactly how much you will be charged when paying for goods or services abroad. However, there are some disadvantages of the ‘Dynamic Currency Conversion’.
The biggest one is that nothing comes free in this world. Since ‘Dynamic Currency Conversion’ is a service, the catch is that you end up paying a very high exchange rate, that may be as high as 3-4% than the normal market exchange rate or the interbank forex exchange rates. Currency market is highly dynamic; the rates keep changing every second. Hence, the ‘Dynamic Currency Conversion’ scheme ensures that the exchange rates offered by it are not making it suffer a loss. So who bears the charges, it’s you - the cardholder.
Another point is that the retailer offering ‘Dynamic Currency Conversion’ may charge you a commission for this conversion service. You should always be careful to check that the exchange rate used in the conversion is competitive, check for any commission charged, and double check the total against what you were expecting to spend. This is because the exchange rate being used by the retailer may not be as competitive as the rate offered by your card company.
The best way to tackle this ambiguous situation is to have a rough idea of the exchange rates while you are holidaying abroad. If you believe that the retailer is charging heavily in the name of ‘Dynamic Currency Conversion’, as compared to the exchange rate that you have in your mind, then better to pay in foreign currency and let the credit card company exchange rates be applicable.
If you are in any doubt, ask for the bill in the local currency. If the retailer is operating Dynamic Currency Conversion, you should always be able to choose the currency of the country you are in.
-Avoid credit card frauds abroad
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In the previous article, we have mentioned about the charges that you may have to pay while using your credit card abroad. In this article, we will highlight some steps that you should keep in mind while using your credit card abroad.
In our country we are accustomed to free card payments and cash withdrawals, while the same is not true for overseas, as it comes with extra charges.
If using cash is unavoidable, make sure you take time to get to know the currency, and never get rushed into making a purchase without thoroughly checking what you are handing over. Be particularly careful when exchanging money, and always check that you are getting a good exchange rate by shopping around. In most cases it is easier – and safer – to withdraw money from a cash machine with your UK debit card as you need it rather than carrying around cash or traveller’s cheques.
Here are some tips that you should keep in mind while using your credit card or debit card overseas:
We all know that losing your cards while you are overseas, or the credit card or debit card getting stolen, is a huge inconvenience. It is even more inconvenient when you’re on holiday. By following some simple advice you can help protect yourself against card theft when travelling abroad:
• Only take cards with you that you intend to use on holiday; leave others in a secure place at home.
• Consider letting your bank know in advance that you are going to be using your cards abroad. If your bank spots unusual spending patterns it may try to contact you to check that the transactions are genuine and it could even block your transactions. For e.g., Barclays Credit card has a special feature called “country flag”. If you are going to use your card abroad, ask them to place a country flag on your card for that country. It will authorize the use of your UK Credit card in that country.
• Make sure you have the 24-hour contact phone numbers for the cards you do take with you – in case you need to speak to your card company.
• Treat cards, cheques and traveller’s cheques as valuables, in the same way you would treat cash, and make sure that your travel insurance covers everything you take abroad, including your card.
• To avoid pickpockets it is often advisable to wear a concealed money belt to hold your cash, cards, traveller’s cheques and passport.
• Take extra care with cash machines as you may be unfamiliar with the layout or how much cash you are withdrawing.
• Always shield your PIN with your free hand when typing your PIN into a keypad in a shop, business or at a cash machine.
• Often on holiday there is a tendency to take out more cash than you would at home, so be careful to only carry with you as much as you need, and store the rest in your hotel safe (where possible).
• Guard your card and card details at all times. Safeguard your PIN. Don’t give it to anyone – even if they claim to be from the police or your bank.
• When you get home, as soon as possible check your (online) statement carefully for unfamiliar transactions.
The successful introduction of chip and PIN in the UK has meant that fraudsters are increasingly being driven overseas to commit card fraud on UK cards in countries where chip and PIN has not yet been rolled out. So make sure that you don’t reveal your PIN no. to anyone.
In our country we are accustomed to free card payments and cash withdrawals, while the same is not true for overseas, as it comes with extra charges.
If using cash is unavoidable, make sure you take time to get to know the currency, and never get rushed into making a purchase without thoroughly checking what you are handing over. Be particularly careful when exchanging money, and always check that you are getting a good exchange rate by shopping around. In most cases it is easier – and safer – to withdraw money from a cash machine with your UK debit card as you need it rather than carrying around cash or traveller’s cheques.
Here are some tips that you should keep in mind while using your credit card or debit card overseas:
We all know that losing your cards while you are overseas, or the credit card or debit card getting stolen, is a huge inconvenience. It is even more inconvenient when you’re on holiday. By following some simple advice you can help protect yourself against card theft when travelling abroad:
• Only take cards with you that you intend to use on holiday; leave others in a secure place at home.
• Consider letting your bank know in advance that you are going to be using your cards abroad. If your bank spots unusual spending patterns it may try to contact you to check that the transactions are genuine and it could even block your transactions. For e.g., Barclays Credit card has a special feature called “country flag”. If you are going to use your card abroad, ask them to place a country flag on your card for that country. It will authorize the use of your UK Credit card in that country.
• Make sure you have the 24-hour contact phone numbers for the cards you do take with you – in case you need to speak to your card company.
• Treat cards, cheques and traveller’s cheques as valuables, in the same way you would treat cash, and make sure that your travel insurance covers everything you take abroad, including your card.
• To avoid pickpockets it is often advisable to wear a concealed money belt to hold your cash, cards, traveller’s cheques and passport.
• Take extra care with cash machines as you may be unfamiliar with the layout or how much cash you are withdrawing.
• Always shield your PIN with your free hand when typing your PIN into a keypad in a shop, business or at a cash machine.
• Often on holiday there is a tendency to take out more cash than you would at home, so be careful to only carry with you as much as you need, and store the rest in your hotel safe (where possible).
• Guard your card and card details at all times. Safeguard your PIN. Don’t give it to anyone – even if they claim to be from the police or your bank.
• When you get home, as soon as possible check your (online) statement carefully for unfamiliar transactions.
The successful introduction of chip and PIN in the UK has meant that fraudsters are increasingly being driven overseas to commit card fraud on UK cards in countries where chip and PIN has not yet been rolled out. So make sure that you don’t reveal your PIN no. to anyone.
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Using Credit Cards overseas for forex transactions
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Holidaying and business trips are a part of British life, so there is more and more expenditure in foreign currency. Use of Credit Cards has proved to be an effective way for Britons to pay for their overseas expenses and they usually do not worry about cost of using their credit cards abroad. But what is the real truth about using a credit card abroad?
If you are thinking of or have been using your credit or debit cards abroad instead of cash, then you are required to pay extra expenses. Fees charged by UK banks for overseas transactions when customers use their cards overseas are on going up. Another problem that is usually not identified by individuals is that overseas establishments are encouraging customers to pay for expenses in GBP – and it’s usually at a very bad exchange rate. Though the banks and the foreign establishments gain on these transactions, it it’s the customer who looses dearly.
It is estimated that Britons will spend around 25 billion GBP on cards in the year 2007, and hidden fees and exchange rate charges will add another 500 million GBP. The exchange rate loading added by nearly every credit card provider is between 2.5% and 3% for every foreign currency transaction. This is the price per transaction that you will have to pay for each transaction you make with your UK credit card. Those fees have gone up in the last 1 year.
In July Lloyds TSB declared that it is increasing the cost of using its debit cards from 2.75% to 2.99%, and it also charges £1 as an overseas transaction fee every time as well. Lloyds claim that the increase on overseas card charges is to help pay for tighter anti-fraud controls.
NatWest has also increased its overseas loading from 2.65% to 2.75%, and its debit card transaction fee has gone up from 75p to £1.25. HBOS has pushed up its international fee on credit cards from 2.75% to 2.95%.
Using a cash machine to withdraw cash is also getting costly. Banks now generally add a standard exchange rate loading to any cash withdrawal, and most also add a service fee. Withdrawing cash from HBOS costs £1.50 per transaction. With NatWest it’s 2% with a £2 minimum fee. Lloyds TSB has a charge of 1.5% with a minimum fee of £2. A notable exception to these kinds of charges in Nationwide which has no exchange loading on its cards and charges no fee for cash machine withdrawals.
The new concern for holidaymakers is the increasing use of ‘dynamic currency conversion’ (DCC) being used by foreign retailers. This is where the shop, hotel or restaurant suggests that they will convert the bill into sterling. The benefit of this is that the UK customer can see what the price is in pounds and pence, but the exchange rates can be as much as 3% greater than those used by credit card providers. Dynamic currency conversion rates are set by the merchant and their bank. Although MasterCard and Visa state that customers must be given a choice of whether to pay in sterling or local currency and the exchange rate must be stated, the rules do not say what language the information must be provided in. The use of DCC is on the increase in popular UK destinations like Ireland, France and Spain.
Another option for paying abroad is to use prepay travel cards. They are the same size and shape as a credit card, with a Visa, MasterCard or Amex logo, but the idea is to load these up with dollars or euros before you go away. There is a mark-up on the exchange rate for loading, but there are no other charges on purchases. These can also be used in a cash machine – but for a small fee. Topping up these cards can be done online or by phone. Some have Chip and PIN security and can be frozen if a card is lost or stolen. These cards can also act as a ready-made budget for your trip as you can load the amount you want to spend – but you’ll have to resist re-loading! The problem with this kind of cards is that you have to initially deposit all the money that you want to load the card with. Then, you have to utilize the card. When you withdraw money from a cash machine, they charge you a fee. When you swipe the card at a retailers shop, the psychology that works is against you. You know that there is money in the card, so you don’t want to keep it. You end up spending more because you want to finish off the money on your card.
Most foreign currency exchange bureaux no longer charge commission, but that does not mean that there is no difference in the amount of foreign currency you can buy with your pounds. It is worth shopping around because there can be big variations in the exchange rates used. This can be as much as £33 on only a £200 money exchange. It is recommended to look beyond your own bank or building society; places like Marks & Spencer, the Post Office and Travel Agents all provide foreign exchanges, but don’t leave it until you’re at the airport – they tend to be the most expensive; you’ll pay for the convenience. You can also buy foreign currency online, but it is essential to compare delivery charges if you do. Also, you should remember that paying for currency with a credit card counts as a cash withdrawal, which means the card company will charge a cash-handling fee and immediate interest.
Personally, I always buy foreign currency notes at the local street shops. They not only offer better rates, but there are also possibilities of bargaining and negotiations. Another advantage is that you can buy currency notes from them and return them later. The street in London where there are many forex shops is adjacent to the Oxford Circus Station.
If you are thinking of or have been using your credit or debit cards abroad instead of cash, then you are required to pay extra expenses. Fees charged by UK banks for overseas transactions when customers use their cards overseas are on going up. Another problem that is usually not identified by individuals is that overseas establishments are encouraging customers to pay for expenses in GBP – and it’s usually at a very bad exchange rate. Though the banks and the foreign establishments gain on these transactions, it it’s the customer who looses dearly.
It is estimated that Britons will spend around 25 billion GBP on cards in the year 2007, and hidden fees and exchange rate charges will add another 500 million GBP. The exchange rate loading added by nearly every credit card provider is between 2.5% and 3% for every foreign currency transaction. This is the price per transaction that you will have to pay for each transaction you make with your UK credit card. Those fees have gone up in the last 1 year.
In July Lloyds TSB declared that it is increasing the cost of using its debit cards from 2.75% to 2.99%, and it also charges £1 as an overseas transaction fee every time as well. Lloyds claim that the increase on overseas card charges is to help pay for tighter anti-fraud controls.
NatWest has also increased its overseas loading from 2.65% to 2.75%, and its debit card transaction fee has gone up from 75p to £1.25. HBOS has pushed up its international fee on credit cards from 2.75% to 2.95%.
Using a cash machine to withdraw cash is also getting costly. Banks now generally add a standard exchange rate loading to any cash withdrawal, and most also add a service fee. Withdrawing cash from HBOS costs £1.50 per transaction. With NatWest it’s 2% with a £2 minimum fee. Lloyds TSB has a charge of 1.5% with a minimum fee of £2. A notable exception to these kinds of charges in Nationwide which has no exchange loading on its cards and charges no fee for cash machine withdrawals.
The new concern for holidaymakers is the increasing use of ‘dynamic currency conversion’ (DCC) being used by foreign retailers. This is where the shop, hotel or restaurant suggests that they will convert the bill into sterling. The benefit of this is that the UK customer can see what the price is in pounds and pence, but the exchange rates can be as much as 3% greater than those used by credit card providers. Dynamic currency conversion rates are set by the merchant and their bank. Although MasterCard and Visa state that customers must be given a choice of whether to pay in sterling or local currency and the exchange rate must be stated, the rules do not say what language the information must be provided in. The use of DCC is on the increase in popular UK destinations like Ireland, France and Spain.
Another option for paying abroad is to use prepay travel cards. They are the same size and shape as a credit card, with a Visa, MasterCard or Amex logo, but the idea is to load these up with dollars or euros before you go away. There is a mark-up on the exchange rate for loading, but there are no other charges on purchases. These can also be used in a cash machine – but for a small fee. Topping up these cards can be done online or by phone. Some have Chip and PIN security and can be frozen if a card is lost or stolen. These cards can also act as a ready-made budget for your trip as you can load the amount you want to spend – but you’ll have to resist re-loading! The problem with this kind of cards is that you have to initially deposit all the money that you want to load the card with. Then, you have to utilize the card. When you withdraw money from a cash machine, they charge you a fee. When you swipe the card at a retailers shop, the psychology that works is against you. You know that there is money in the card, so you don’t want to keep it. You end up spending more because you want to finish off the money on your card.
Most foreign currency exchange bureaux no longer charge commission, but that does not mean that there is no difference in the amount of foreign currency you can buy with your pounds. It is worth shopping around because there can be big variations in the exchange rates used. This can be as much as £33 on only a £200 money exchange. It is recommended to look beyond your own bank or building society; places like Marks & Spencer, the Post Office and Travel Agents all provide foreign exchanges, but don’t leave it until you’re at the airport – they tend to be the most expensive; you’ll pay for the convenience. You can also buy foreign currency online, but it is essential to compare delivery charges if you do. Also, you should remember that paying for currency with a credit card counts as a cash withdrawal, which means the card company will charge a cash-handling fee and immediate interest.
Personally, I always buy foreign currency notes at the local street shops. They not only offer better rates, but there are also possibilities of bargaining and negotiations. Another advantage is that you can buy currency notes from them and return them later. The street in London where there are many forex shops is adjacent to the Oxford Circus Station.
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