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Forums » Currency & Credit Cards » Watch out for DCC at ATMs (Yes, now the banks are trying it!)

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PHeymont

Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by PHeymont »

I just posted a note on the Portugal forum, warning that bank ATMs there are now offering a form of Dynamic Currency Conversion, offering to debit your account in either Euros (good choice) or your own home currency (bad choice). I’m posting here, too, in case any other country’s banks have tried it on, or will.

DCC--Dynamic Currency Conversion--is a trap for the unwary. When a hotel or store offers "for your convenience" to charge you in your own currency, say US dollars, instead of Euros, what they are actually offering to do is do your currency conversion at a bad rate that gives them more of your money than if you are charged in Euros.

That's because if you are charged in Euros, the currency conversion takes place between their bank and yours, at the "interbank" rate, which is the lowest rate of the day. Of course, you don't get the actual interbank rate, but usually within a half-point of it.

An example, from today in Porto. I took a look at today's offer; 200€ or $279.36. That's a rate of 1.3968. Checking the interbank rate for today showed 1.326. Even allowing for the difference between interbank rate and the settlement for me, that's $14 dollars I saved by choosing to have my account charged in Euros.

So, again: NEVER allow your card or your account to be charged in anything but the local currency!

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pdhenry

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by pdhenry »

The "ATMs" at Heathrow are operated by Travelex which I took as an indication that DCC was their only mode of operation. 

I asked the driver to stop briefly at a service center on the Motorway. I paid a couple of pounds as an ATM fee but I was confident that it was less than I would have paid at the Travelex machine.

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PHeymont

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by PHeymont »

There were also bank-owned machines, in T5 last December when I passed through...

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nomad77

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by nomad77 »

o.O Good to know information. Thanks for the heads up!

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PHeymont

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by PHeymont »

And now here's the next phase!

Used an ATM today in Barcelona, and it offered me a choice: charge my account in Euros, or in dollars. As in Portugal, the proposed exchange rate was WAY over the interbank rate. 

So, it appears that the practice is spreading.

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drobert360

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by drobert360 »

The use of an ATM to perform on the spot currency conversion is disturbing ... how many tourists will be deceived and be taken by a deceptive ploy clearly aimed at pocketing tourist's travel dollars.  

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PHeymont

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by PHeymont »

Exactly! It is precisely the sort of practice that banks should not be allowed to do, and should warn customers against. And it doesn't have ANY convenience or other positive aspect.

If the bank were to say "Choosing $ means you will pay $1.38 per Euro, choosing € means you will pay $1.33 per Euro," exactly NO ONE would choose $. Therefore, offering the choice without the information is plain dishonest.

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kringenwally

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by kringenwally »

Well, it's not that bad, in PHeymont's experience, "it offered me a choice: charge my account in Euros, or in dollars"so only the clueless will go for dollars when presented with a choice, and word will get around quickly about this not being a good idea, so not too many will remain cluesless for much longer.

It would be nice if we could trust the American banks to do a bit of an education campaign in these matters, but they are so parochial ("what, you're going overseas????"), and more hellbent on signing you up for more revenue-generating instruments like "convenience" checks that draw on your credit card (can you say "instant finance charge"?) and more credit cards - I don't see much help for consumers coming from them.


 

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pdhenry

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by pdhenry »

Another example of creeping DCC:  I was updating the credit card information in my Avis profile and there was a check box indicating that Avis should bill my credit card in my currency (USD) rather than the local currency of the rental. The markup was disclosed as 3%.  The check box was pre-selected so I had to clear it if I didn't want them to do this. 

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PHeymont

RE: Watch out for DCC at ATMs (Yes, now the banks are trying it!)

by PHeymont »

I think this is becoming the financial world's equivalent of the airline fee scam: hidden charges and hidden implications.

Time for some regulation and education!

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