Not really

Travellers short-changed 7pc by choosing wrong option when spending overseas

Not short changed, no:

Foreign holidays and business trips are often expensive affairs, but travellers could be short-changing themselves by up to 10pc by choosing the wrong card machine option when they spend abroad.

Those who travel overseas are often given the option of paying in local currency or sterling when they pay by card in shops, bars and restaurants. However, travellers who pay in sterling are typically offered a currency conversion rate much poorer than the market rate.

“Make a choice that others disagree with” might be closer to hte truth.

Sure, it’s possible to surmise that they’re all stupid and thus make the “wrong” choice. It’s also possible to ponder that perhaps they prefer the certainty of knowing how much is going to be sucked out of their account to the extra they could gain through uncertainty.

More research is needed, as they say, to work out which of the two explanations holds.

15 thoughts on “Not really”

  1. In my experience the sterling price is often better because there isn’t a non-sterling transaction fee added to the amount by my bank.

  2. I think that travellers regularly are ripped off by currency transactions… I noticed in my local Post Office yesterday that they proudly claim “No Commission Charges” – they don’t need to when the rate that they’re offering for, for example, the Euro is 11 cents worse than the official rate. And as for the rates offered at airports!!!

  3. There is an information deficit here. You have no clue which rates are going to be used. If you choose to be billed in foreign currency, you get an unknown rate plus the non-sterling fee. If you get billed in sterling, you get another unknown rate probably set on the next day. It’s a lottery either way

  4. The other choice is to get a Transferwise debit card, load it up with your desired currency at a known (and good) rate, then not worry about being ripped off.

  5. Bit of free advertising. I’ve been running a Tranferwise Borderless account for a while. My card will accept debits in any currency I’m holding a balance in.* Exchange cost are minimal.
    And here’s the added bonus. You got a problem you can ring their helpline & speak with someone** uses recognisable english & is actually helpful.
    *But you often do have to ask to be billed in that currency. Otherwise they can take it for granted, coz your Brit, it’s a GBP card & bill you in sterling & you get stuffed with their bank’s exchange charges.
    **Without being held in a queue for 40 mins & then cut off á la Barclays

  6. See Noel’s another convert to the green card.
    Bit more advertising. If you need to transfer money internationally outside the currencies Transferwise handle, Worldremit’s useful. I put £300 into a Brasilian account yesterday at a cost of under £3. Credited the same day. I can provide next day cash pickups* in Colombian banks for the same sort of costs.

    *Limited by the Colombian, anti-trafficing, money transfer ceiling.

  7. @Baron Jackfield
    Depends where you live & how much exchange you need. When I was in the process of exiting the UK & commuting UK/France I cut myself a deal with on of the small bureax d’exchange round the corner in Queensway. €’s for £’s in cash. Made sense for the guy running it because the majority of his exchange transactions were in the other direction, so saved his bank exchange costs. Got excellent rates.

  8. Diogenes November 29, 2019 at 11:21 am
    In my experience the price in EUR/CH and the alternative billed in sterling are shown at payment. So long as you have some idea of current rates you have enough information to make the choice.
    Transferwise for me too. Works very well for paying for small items like autoroute tolls and minor shopping. And as I know what rate I got when I charged up the card I have that handy benchmark for judging if paying with another card is a better option.

  9. @ BJ, BiS – I am normally a bit lazy and use the ATM abroad or credit card (extra Airmiles at least) but for a recent long-ish trip to Japan, I went to a local money changer and the rate was excellent, made a noticeable difference to my spending money. Good thing about Japan is they have big notes as well so easy to carry cash.

    I started applying for a Transferwise account online, but binned it because it does not suit my specific needs – you can’t transfer Rand direct to your account. I have a load of Rand in a Rand account with a UK bank and wanted to be able to take them to Cape Town without running the risk of getting shot. The biggest note they have in SA is R200, about a tenner, so a few weeks holiday spends is bulky to say the least…

  10. To Tim’s original point, “more research needed”. There’s an argument that if you’re a bit innumerate and you find yourself in a country with an exchange rate which is hard to calculate mentally (e.g. 30,000 Vietnamese dong to the pound), then seeing the final bill in pounds can be reassuring, and avoids you being fleeced by the vendor surreptitiously adding an extra zero or two. But if it’s euros which are close to 1:1, you know that a €50 bill is close to £50, so you shouldn’t need the security of knowing the price to the exact penny.

  11. Dynamic currency conversion is always a rip-off. The typical margin is 6%, which greatly exceeds any fees for overseas or foreign currency use (the latter of which you might save by using DCC).

    Always refuse it, always charge back when a merchant uses it against your instruction (I obliterate the “home currency” option and write “NO DCC” and underline it twice on every receipt).

    There is no sane defense to deliberately overcharging a customer like this. Ever. Not even for rabid libertarians.

  12. In my experience (with dollars) you’ll get a better price if you pay in dollars rather than the local currency – more than enough to make up for a bad exchange rate.

    Maybe they do it different on the continent.

  13. Guys, thanks for Transferwise reminder

    Won’t work for everyone, but does for us: £-SEK-Euro trades usually made with family, friends & colleagues

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