The great thing about many of the best travel credit cards out there is the no foreign transaction fee benefit when using the card abroad.
Still, a lot of people face confusion when using their credit card abroad, especially when you’re given the option to pay in US dollars vs the local currency.
At first glance, it looks like a nice convenience perk when your hotel offers you the option to settle your bill in US dollars, but it’s really a sneaky practice that has been coined the term “Dynamic Currency Conversion”.
The smart thing to do is to whip out the XE currency conversion app on your phone and just say no. Here’s why:
- The exchange rates are almost always worse.
- You’ll probably end up paying a tacked-on 2-4% fee you didn’t need to pay
- In the worst-case scenario, you could be stuck paying the fee twice, if you’re using a card abroad that does not waive foreign transaction fees in the first place (most charge 3%)
Keep in mind that most US credit card companies now charge a fee for all transactions made outside the US, whether it is in dollars or not (I learned the hard way while using my Club Calrson Visa at the Radisson in Aruba, even though everything in the resort is priced in US dollars; luckily I was able to have those fees removed as a courtesy with a quick call to US Bank).
The US-dollar “convenience” option is just a way for hotel companies, car rental companies, and other merchants to take more money by deceiving you.
Much like the outrageous taxi “credit card convenience surcharge” scam that have creeped all over the US (Vegas, especially), I really would like to see the dynamic currency conversion practice vanish!