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Beware DCC (Dynamic Currency Conversion)

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DiviLuvva
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Beware DCC (Dynamic Currency Conversion)

#262911

Postby DiviLuvva » November 8th, 2019, 7:21 am

There's a current thread on the benefits of using TransferWise and similar cards overseas. I thought I'd add a recent experience to show how much DCC can cost if you fall into the trap.

Yesterday I withdrew 300 EUR from my (GBP) Starling account at a CaixaBank ATM in Tenerife.

There was an ATM charge of 2 EUR, thus a total of 302 EUR to charge my account.

The ATM kindly offered to use the CaixaBank conversion, which would debit 281.84 GBP from my account. It helpfully highlighted the "YES" response.

I politely declined the offer and pressed the darker "NO" button.

The ATM dispensed 300 EUR, and my phone bleeped, with the Starling app telling me that my account had been debited 260.22 GBP, or 302 EUR at a conversion rate of £1.00=1.1606 EUR. That was the current interbank rate at 11:59 yesterday.

So the kind ATM had offered to save me MINUS £21.62!

Moral: read the screen carefully, take your time and choose the option to use the local currency rather than convert to GBP.

Dod101
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Re: Beware DCC (Dynamic Currency Conversion)

#262917

Postby Dod101 » November 8th, 2019, 7:46 am

Surely that is just the same as declining to be debited in sterling in any foreign location when using a sterling based credit card? It is of course sensible advice but it is no different surely? Either pay bills in restaurants or wherever in in local cash or pay the merchant in local currency by card.

Dod

DiamondEcho
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Re: Beware DCC (Dynamic Currency Conversion)

#263130

Postby DiamondEcho » November 8th, 2019, 10:58 pm

Re Dod^. My rule of thumb, and I believe it to be true, when spending on a UK card abroad and faced by the terminal asking 'Pay in local currency vs Pay in Sterling' the rule is ALWAYS pay in local. Ie It's better to let your home bank do the conversion than the anonymous intermediaries behind the electronic PIN/handset you put your card into. IME UK banks, even historically, are better on the FX/charges of foreign transactions than foreign banks
Living abroad for years, and sometimes for months at a time using UK cards whilst there, not really getting it and paying either in local or Sterling, this^ was my experience. Once it clicked how opting to 'Pay in sterling' got you scalped, for several years I had a reminder in my bank account spreadsheet as a prompt - 'PAY LOCAL!'.

Sobraon
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Re: Beware DCC (Dynamic Currency Conversion)

#263134

Postby Sobraon » November 8th, 2019, 11:53 pm

I use a Fineco EURO debit card and have full control ( also have some IDVY.MI with the bank to help with top-ups). I just knew at some point I would press the wrong button and kick myself.

ReallyVeryFoolish
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Re: Beware DCC (Dynamic Currency Conversion)

#263141

Postby ReallyVeryFoolish » November 9th, 2019, 3:18 am

This is all true, what does tend to be insidious is the use of language deliberately using double negative text. Such that sometimes at an ATM you have to think for a second whether pressing YES or NO gets you the desired outcome.

Dod101
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Re: Beware DCC (Dynamic Currency Conversion)

#263151

Postby Dod101 » November 9th, 2019, 8:49 am

I always take some local currency with me, but on the whole pay by my Halifax card in local currency. I have only once taken local currency from an ATM at destination and very much regretted it. I think I did the same as the OP.

Dod

DiviLuvva
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Re: Beware DCC (Dynamic Currency Conversion)

#263353

Postby DiviLuvva » November 10th, 2019, 3:07 pm

Dod, I actually took the EUR option at the ATM; it's the subterfuge that they use that annoys me - plus the very poor rate they offer if you choose the GBP transaction.

On the first day here I withdrew 200 EUR from my Transferwise account. (It's entirely in EUR.) The CaixaBank ATM also offered the EUR/GBP option. Annoying.

swill453
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Re: Beware DCC (Dynamic Currency Conversion)

#263365

Postby swill453 » November 10th, 2019, 4:50 pm

DiviLuvva wrote:Dod, I actually took the EUR option at the ATM; it's the subterfuge that they use that annoys me - plus the very poor rate they offer if you choose the GBP transaction.

Indeed. I wonder if there's ever a scenario where it's worthwhile taking the offered conversion?

For example, if I was to use my First Direct debit card abroad, the charges would be:
Transaction fee 2.75%
Cash fee 2% (Min £1.75, Max £5).

This always seemed to me to be quite expensive, hence I use a fee-free debit card from Nationwide.

But for the withdrawal in the OP this would still work out nearly £10 cheaper than the offered £281.84.

Scott.

servodude
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Re: Beware DCC (Dynamic Currency Conversion)

#263581

Postby servodude » November 11th, 2019, 9:29 pm

swill453 wrote:Indeed. I wonder if there's ever a scenario where it's worthwhile taking the offered conversion?

For example, if I was to use my First Direct debit card abroad, the charges would be:
Transaction fee 2.75%
Cash fee 2% (Min £1.75, Max £5).


UK banks have traditionally been pretty good on this kind of thing, both in transacting at close to interbank rate and charges
It is not so elsewhere.

I generally transfer money from AUS to my Nationwide account in the UK prior to travelling anywhere to minimise and consolidate the exchange costs Which is a bit of a faff but will normally for small transactions work out to cost me ~1.5%

Quick back of a ciggie packet check at current rates for pound to AUD:
current mid-market rate 1.865
My bank (westpac) current rate for foreign cash withdrawl 178.38 ( ~4.5% difference)

on top of that will be a 3% forex transaction fee + either a $5 charge for using my debit card, or further 2% cash advance rate for credit

so I'd be looking at over 9%, or more if using debit for a small amount
not sure which (if any) of these charges I'd avoid if I took the local conversion?
- but it's not the clear cut decision that my nationwide card makes it

- sd


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