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When an Overseas Merchant Offers to Convert Your Credit Card Bill Into U.S. Dollars, Say No

    It's known as "Dynamic Currency Conversion", but it should be called "Dynamic Currency Cheating".  You encounter the shady offer in a Paris restaurant, a London hotel, a Tokyo department store--any number of overseas situations.  You've just made a purchase of a meal, a hotel room, a jacket or a pair of shoes, for which you present your credit card in payment.  And the local sales clerk or merchant offers, as a gesture of goodwill, to make out the bill in "your own local currency", namely U.S. dollars, rather than in euros, pounds or yen.

     Just say no.  Require that the bill be written on the credit card slip in euros, pounds or yen.  If you permit them to convert that sum into dollars, they will use an exchange rate so poor that you will automatically pay 15% or 20% more than you should have.

     And even though you have paid the badly-adjusted bill in dollars, the fact that you have made the purchase overseas will also cause your credit card company to add a 3% surcharge to the eventual bill you receive (a "foreign transaction fee").  Here's a rotten way to lose part of your hard-earned savings. 

     So turn down the kind offer to convert your foreign bill into dollars.  Have them place the very same sum on the bill as appears on the menu, or the foreign hotel rate card, or the sales tag.  If you have purchased a meal for 22 Euros, have them charge you 22 Euros.  If your hotel bill comes to 86 pounds, have them charge you 86 pounds.  And so on.

     As for that transaction fee, it's already bad enough that every credit card company other than Capital One (and most credit unions) adds a 3% foreign transaction fee to the bill you receive each month.  You can avoid that wholly unnecessary charge by obtaining a Capital One credit card or a credit card issued by your local credit union.  In these days of a weak dollar, it's important to avoid every such unnecessary expense.

     But in particular, don't let that foreign merchant change your bill from the local currency into dollars.  If he or she does make that conversion, you can be sure it will be at a horrendous exchange rate--one that is sometimes more than the 15% or 20% that I've referred to above.  Instead, you'll eventually be billed at a dollar price that's been calculated (by the credit card company) a a much more accurate rate of exchange (somewhat offset by their 3% surcharge). 

     And what if you discover that he or she, without telling you, has already performed that conversion?  Take the bill back to the restaurant, hotel or shop and have them reissue it in the local currency, permitting you to tear up the earlier-issued dollar credit card slip (that you have signed).  It's already bad enough that you will incur a 3% credit card surcharge from your friendly Visa, Mastercard, or American Express, dealer.