Paying for accommodation etc in AUD vs foreign currency?

[aussiedom]

I vaguely recall a story in the media a while back highlighting a trap where Aussies could end up worse off by electing to pay in AUD as opposed to the relevant foreign currency.

I cannot remember the precise details of the story, but I think the gist of it was that some travel websites (maybe Expedia, Hotels.com etc or similar?) were offering a choice to pay in AUD. Not sure if this was a one-time question for your user settings or was asked each time you booked something. Obviously the option to pay in AUD is attractive on the face of it, as you'd assume this would avoid conversion fees on your credit card. However, if i remember the story correctly, the sites in question had something hidden in the fineprint that meant you'd actually be worse off paying in AUD. From what I recall, this was seen as highly deceptive conduct and the sites who were doing it got a bit of a flogging in the media at the time.

Can anyone remind me of the actual facts of this issue? I am in the process of booking a trip which will involve flights and accomm in USA, Mexico and Cuba, so I am keen to understand whether this is a factor I should be mindful of as I progress with making our reservations. Sorry if I've got this all wrong!

Many thanks, Dom

 

[Cynicor]

Multiple possibilities.

DCC is the first, but not likely with wholesalers like Wotif and Expedia. DCC is where they do the fx conversion for you, and it always works out poorly.

The second possibility is banks charging overseas transaction fees on an AUD denominated charge, because the merchant is oseas based. You have no way of knowing this, so it's best just to avoid the banks- ANZ, HSBC, NAB, maybe others too.
CITI, GE and Amex don't do this.

To know if you have been DCC'd, see what the price of a hotel etc is in the original/local currency and then use XE to convert it. If it's pretty close, the you are fine to pay in AUD.

Most of these things are not the merchant being sneaky or underhand.

 

[MEL_Traveller]

I vaguely recall a story in the media a while back highlighting a trap where Aussies could end up worse off by electing to pay in AUD as opposed to the relevant foreign currency.

I cannot remember the precise details of the story, but I think the gist of it was that some travel websites (maybe Expedia, Hotels.com etc or similar?) were offering a choice to pay in AUD. Not sure if this was a one-time question for your user settings or was asked each time you booked something. Obviously the option to pay in AUD is attractive on the face of it, as you'd assume this would avoid conversion fees on your credit card. However, if i remember the story correctly, the sites in question had something hidden in the fineprint that meant you'd actually be worse off paying in AUD. From what I recall, this was seen as highly deceptive conduct and the sites who were doing it got a bit of a flogging in the media at the time.

Can anyone remind me of the actual facts of this issue? I am in the process of booking a trip which will involve flights and accomm in USA, Mexico and Cuba, so I am keen to understand whether this is a factor I should be mindful of as I progress with making our reservations. Sorry if I've got this all wrong!

Many thanks, Dom

Get yourself a 'fee free' credit card (such as 28 Degrees) and you can pay in foreign currency without any extra charges.

Dynamic Currency Conversion (DCC) is almost always, without fail, worse off for the consumer. The exchange rate is artificially high (or low, or whatever you want to call it) and the profits are split between the merchant, and the merchant's bank.

Even with standard Aussie credit card foreign currency fees (around 3-3.5%), you're almost always better off than accepting a DCC which can be upwards of 5-7%. You'd possibly consider DCC if you were overseas and the aussie was plunging at 1c or 2c a day.