This rip-off catches out even the most seasoned travellers.
You’re settling your hotel bill, or paying for your meal at a restaurant, buying some clothes at a shop, or paying for your tours and activities. You decide to pay by credit or debit card. During the transaction you get an onscreen prompt: “Would you like to pay in your own currency?”
Instinctively, you would feel that it’s cheaper to pay in your own currency, but don’t be fooled. If you choose to pay in your own currency, you’ll be paying more than you should – probably somewhere in the range of 6- 8 % more.
HOW IT WORKS:
You’re not avoiding any currency exchange and now the institution that’s processing the card payment can set the exchange rate at whatever it likes. Even if you are shown how much you’ll be charged in your own currency, most travellers don’t go to their Mobile Exchange App to work out complex exchange calculations before confirming the transaction.
There can even be an extra conversion fee changed on top of your bloated exchange, that’s split between the merchant (the restaurant, the shop, the hotel) and the financial institution.
Some EFT Point Of Sale terminals also add an extra level to the process, by asking “Are you sure? If you choose to pay in a local currency, the exchange rate will be set by your bank or financial institution” and some staff have been trained to guide you towards hitting the “yes” button.
These “dynamic currency conversion” charges are perfectly legal, and the entire transaction is shown to you before you commit to the sale.
THE OPTIONS
- Check if a local bank or other financial institution waives foreign transaction fees and foreign ATM fees – there are a few. You could also consider using a pre-paid travel card that allows you to load up with foreign currencies.
- Another tactic is to use cash wherever possible as long as you feel safe doing so, as means taking cash with you or money using local ATM’s. (to avoid extra transaction or exchange fees)
- Always choose to pay in the local currency when you use a credit or debit card.
Keep in mind that your bank most likely charges an inflated fee to draw cash from your credit card and this will hurt your budget, even more, when coupled with transaction or exchange fees.
