20/04/2023
When is a “convenience” a pointless rip-off? When you pay in dollars abroad.
This is called “dynamic currency conversion.” And if you’ve traveled internationally in the past few years, you’ve probably encountered it. You make a purchase; you tap your credit card to pay; and then, just when you think you’re done, the payment terminal asks you one more question:
Would you like to be charged in the local currency? Or would you prefer to pay in dollars?
The answer is always, always, *always* to pay in the local currency.
If you accept the offer to pay in dollars, you’re letting a third party handle the conversion for you — which is invariably a bad deal. However, if you pay in the local currency, you can take advantage of the more generous bank-to-bank rate.
In this example, I could pay either 14.50 Polish złoty...or $3.91 in US dollars. I opted for złoty, allowing my credit-card company to handle the conversion, and it appeared on my statement as $3.64. Which means if I’d opted for the “convenience” of paying in dollars, I’d have overpaid by about 7 percent.
Can you imagine paying 7 percent extra, on all credit-card transactions across the board, simply by accepting this offer to pay in dollars?
In my imagination, somewhere out there is a finance executive who had this greedy brainstorm some years ago: If we can trick enough travelers into pointlessly paying in dollars, we can pad our profits that much more. He probably got a plum promotion. And the rest of us got stuck having to jump through the hoop of answering this completely unnecessary question — a deeply irritating, miniature speed bump — with each and every transaction, all day long, every day of our trip.
I hope someday this practice is outlawed. But in the meantime, just remember one simple rule: ALWAYS CHOOSE THE LOCAL CURRENCY...never dollars!