Payment of CC bills denominated in foreign currency

TravellingMartin

I'm searching for a credit card that costs the least when I use it abroad. There is a section on this site that I found very useful. However, there is one statement that I don't fully understand. Here it is...

Advanced MoneySavers Note: Make sure you pay in the overseas currency
There's a growing trend when spending abroad for the retailer to do the conversion to pounds itself. This way you get a much worse rate, and it gets a cut. You should always insist (assuming you're using one of the cards from this article) that you are charged in the overseas currency, not sterling.

My question is this: if, for example, I go to mainland Europe and rack up a credit card bill that's denominated in Euros, does this mean that I need a Euro bank account in the UK in order to pay off the bill efficiently? The implication is "yes". So, I then go to Hungary, Bulgaria, USA... that's a lot of accounts!

Any useful comments would be appreciated. To the moderators... perhaps an extra sentence or two could be added to that page.

MPH80

Hi there,

What Martin is saying in that article is that you should let your credit card company do the conversion to pounds for you - not the retailer.

The growing trend is that the retailers do the conversion, charge the credit card in pounds (at a VERY bad conversion rate) and pocket the difference.

If the retailer charges in Euros - the credit card company converts it into Pounds at a standard rate and you pay it off in Pounds.

So there's no need for a Euro account or anything like that. Your credit card bill will still show up in pounds - it's just about the rate at which your purchase, in Euros, is converted into Pounds.

M.

TravellingMartin

Thanks for the prompt reply.

Somewhere along the line, I thought that I could gain more control over who does the currency exchange. Leaving it to the credit card company still exposes me to their exhange rates. It seems that the Nationwide card would, on the face of it, be best for me but the benefits of the card would be partially negated if they used a relativley poor exchange rate. It's something else to check out before going ahead with getting such a card, I guess.

Cheers,

Martin

HGLTsuperstar

Nationwide is certainly the tops, they offer a very good exchange rate in addition to the absence of overseas transaction charges. The point about making sure you pay in the local currency is that the onus is on you to be firm with the retailer, irrespective of whatever card you're using (but would highly recommend Nationwide, go for the Comic relief card and they also contribute to the charity at no expense to you, bar the higher monthly interest rate but if you pay in full each month that's immaterial)

scrunge

Does anyone know an easy way to find out the exchange rate used by the credit card companies? I have a Liverpool Victoria card that I use to make purchases in Europe. On 16th March I was charged £185.30 for a purchase of 266.80 euros, an exchange rate of 1.4398 euros to the £. The Interbank exchange rate on that day (from https://www.oanda.com) was 1.4517 - a difference of over £1.50. According to the MSE site the credit card companies use the 'Visa/Mastercard wholesale rate’ but I can't find anywhere on the web where this is quoted. Any ideas anyone?

pin

Visa rates:

http://www.corporate.visa.com/pd/consumer_ex_rates.jsp

Visa exchange rate FAQ:

http://www.corporate.visa.com/pd/consumer_ex_faq.jsp