Stealth charge on foreign transactions

harttss3

One of the lesser visible costs of paying for overseas purchases with a credit card is the rubbish exchange rate you will get from your credit card provider. I recently made a purchase in Euros, checking the daily exchange rate at the time, only to find that when the transaction appeared on my statement, the converted amount was almost £10 more than I had anticipated. When I checked the conversion rate used by my credit card provider, I find that they not only didn't use the market rate for the time, they used a rate worse than the tourist rate. Despite my rants to the credit card the ony response I get is 'that is our rate', and yet I can find nowhere where their exchange rates are posted. Surely they should use a standard bank exchange rate! On top of this they charge 2.5% for overseas transactions anyway!!!:mad:

sillystudent_2

Which credit card is it? I ask because tbh I'm quite surprised as whenever I've been abroad my credit cards have actually given me the best exchange rates, better than using a debit card. The 2.5% charge is standard unfortunately, but is usually made up for by the good exchange rate! The bank/credit card company's rate is, in my experience, usually very close to the 'wholesale' exchange price (i.e. the one you'd find on xecurrency or exchangerate.com, and much better than you'd get in say a bureau de change)

In fact one time (in an emergency) I had to withdraw cash from a credit card in Europe (Prague) and because I got such a gd exchange rate, it worked out cheaper than it would have from my debit card, even with the cash advance fee on top! (of course I paid it off within a week so high interest rate wasn't an issue)

If you're planning to use credit cards abroad a lot I'd recommend applying for a Nationwide credit card (http://www.nationwide.co.uk/creditcard/goldcard/default.htm) its the one I use, as for a start it only charges 1% handling charge as opposed to 2.5%, and in fact there is no charge at all inside the EU! Plus, as said above, the exchange rates are great!

Hope this helps

harttss3

It's a Tesco Personal Finance cc

dzug1

They do use a standard exchange rate - that set by Visa or Mastercard and it will approximate to the market rate

They then load the rate, typically by 2.75%, by varying between 0% and 3% depending on the issuer.

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

gives visa's rates

Methinks you've misinterpreted something.

Or did you use Dynamic Currency Conversion where the charge was converted to ££ at the time? That can be a ripoff - the exchange rate may wll be set by the retailer, so it's no good blaming the card company. It can happen (though it shouldn't) without you realising it.

dzug1

Well Tesco charge 2.75% and that should be it.

What was the exchange rate you expected, what was the tourist rate on that day and what was that actually used?

sillystudent_2

It's a Tesco Personal Finance cc

Just had a look and this explains our different experiences pretty well: http://www.moneysavingexpert.com/travel/overseas-card-charges To be fair to Tesco it looks like they're pretty standard with other companies, think I was just lucky to be with Nationwide.

From the looks of it if you're going/spending abroad a bit it would be well worth trying to get a Nationwide card (lol I don't work for them or anything ) - the page I linked to shows that with a Tesco card abroad you pay a whopping 5.75% per transaction (!) whereas with Nationwide you pay a mere 3.5%, or 2.5% inside the EU!

Hope this helps

dzug1

sillystudent wrote: »

Just had a look and this explains our different experiences pretty well: http://www.moneysavingexpert.com/travel/overseas-card-charges To be fair to Tesco it looks like they're pretty standard with other companies, think I was just lucky to be with Nationwide.

From the looks of it if you're going/spending abroad a bit it would be well worth trying to get a Nationwide card (lol I don't work for them or anything ) - the page I linked to shows that with a Tesco card abroad you pay a whopping 5.75% per transaction (!) whereas with Nationwide you pay a mere 3.5%, or 2.5% inside the EU!

Hope this helps

Now you are being silly, sillystudent:D

The data on that page shows you pay 2.75% with Tesco for a purchase in the EU and 0% with Nationwide. In Europe.

The extra amounts you have added on are for cash withdrawals from an ATM. They don't apply to purchases.

sillystudent_2

Now you are being silly, sillystudent:D

The data on that page shows you pay 2.75% with Tesco for a purchase in the EU and 0% with Nationwide. In Europe.

The extra amounts you have added on are for cash withdrawals from an ATM. They don't apply to purchases.

Oh oops, sorry, must have got all mixed up I thought it was the load money + the fee, didn't realise it was just for cash advances, my mistake

Did think it was a bit weird that all the other credit cards seemed such a rip-off, as people always seem to recommend them on here for making purchases abroad vs debit cards lol! Makes Nationwide a bit cheaper but not by much - and tbh at a low rate like 2.75% there's no way the OP should be getting prices ridiculously different to what he expected.

Or did you use Dynamic Currency Conversion where the charge was converted to ££ at the time? That can be a ripoff - the exchange rate may wll be set by the retailer, so it's no good blaming the card company. It can happen (though it shouldn't) without you realising it.

Wow I didn't even realise that happened - is it something more frequent with shops outside the EU or does it happen in Europe as well? What a rip-off lol, I doubt you'd ever end up in a better situation because of the retailer lining their own pockets with 'their own' exchange rate!

Edit: actually thinking about it that's happened to me once! a couple of years ago I was in an already-overpriced nightclub in Singapore, ran out of dollars so had to buy drinks on card, somehow managed to work out 50% more expensive than on the menu :rolleyes:

chattychappy

See also my experience in http://forums.moneysavingexpert.com/showthread.html?t=2178549

dzug1

No worries SS...

I'm convinced that OP has either suffered DCC (as above) or got buying/selling rates confused - easy enough to do. Or multiplied instead of dividing or vice versa.

DCC is actually most common in areas much frequented by tourists in Europe. I suspect it costs the retailer to set it up, so places that don't see many foreign tourists don't bother. The retailer is supposed to offer you the choice of local currrency or your own, but some don't bother

nomoneytoday

Which day and rate did you get?