Choice of Currency

[GladstoneTim]

Recently in Hong Kong and paying by MasterCard (Ignite, nothing fancy) sometimes the Eftpos machine gave the choice of being charged in AUD or HKD. What are people's thoughts on which is best to choose?

 

[Stephen65]

Always pick the local currency, so in your case HKD. The option to be charged in your own currency is called "Dynamic Currency Conversion". It's promoted as letting you know exactly what you will pay in your own currency but what's not mentioned is that the exchange rate applied will be awful for you.

 

[ftm]

Always pick the local currency, so in your case HKD. The option to be charged in your own currency is called "Dynamic Currency Conversion". It's promoted as letting you know exactly what you will pay in your own currency but what's not mentioned is that the exchange rate applied will be awful for you.

+1. This is a feature to benefit the card company, not the consumer.

 

[GladstoneTim]

+1. This is a feature to benefit the card company, not the consumer.

Thanks guys. So it is still preferable to choose the local currency when fx fees etc are included?

 

[notzac]

Thanks guys. So it is still preferable to choose the local currency when fx fees etc are included?

Yup. You'll find yourself being slugged an additional 2% - 3.5% on top of what your bank charges you for a foreign txn. Always pay in local currency.

 

[kpc]

Always pick the local currency, so in your case HKD. The option to be charged in your own currency is called "Dynamic Currency Conversion". It's promoted as letting you know exactly what you will pay in your own currency but what's not mentioned is that the exchange rate applied will be awful for you.

+1. This is a feature to benefit the card company, not the consumer.

Yup. You'll find yourself being slugged an additional 2% - 3.5% on top of what your bank charges you for a foreign txn. Always pay in local currency.

Sometimes, the vendor will automatically select AUD for you...when this has hapapened I have refused to sign the slip and asked for the transaction to be cancelled, and for the transaction to be charged in local currency.

 

[Stephen65]

Thanks guys. So it is still preferable to choose the local currency when fx fees etc are included?

Yes. First because almost all card issuers will charge you a foreign transaction fee regardless of the fact that you charged the transaction in AUD so you don't avoid a fee from your issuer and secondly because the exchange rates applied under DCC are so bad that even if you could avoid all your card issuer's fees you would still be worse off.

Try googling something like "dynamic currency conversion scam" and you'll read lots of horror stories. A particularly evil variation is when the merchant, who is supposed to give you the option of local currency or AUD, selects AUD for you hoping you go don't notice and if you catch him gives you some BS story about how the machine will only let him charge that card in AUD etc.

 

[Stephen65]

+1. This is a feature to benefit the card company, not the consumer.

It also benefits the merchant because the merchant gets a cut of the extra margin they extract from you when you opt to pay in AUD. This is why merchants are so keen to have you pay in AUD.

 

[JohnK]

I try to avoid Dynamic Currency Conversion unless I have no choice.

 

[ChrisFlyer]

Have a look at http://www.australianfrequentflyer....choosing-currency-cr-card-purchase-31882.html , where the question has already been discussed in detail. My post in that threat (#17 on page 2) explains how DCC works in favour of the merchant, not the customer