Traveling to Europe? Beware of the credit card trap that’s costing tourists big money
I just returned from a family vacation through France, Spain, and Portugal, and we had an amazing time. However, I couldn’t help but notice a new tourist trap that could have potentially cost me hundreds of dollars. The trap has to do with a practice known as Dynamic Currency Conversion , or DCC. Because of it, you’re at risk of losing money every single time you pay with a credit card —which,…
Recent research has revealed a credit card trap that can cost tourists significant amounts of money when traveling abroad, particularly in Europe. This trap is known as Dynamic Currency Conversion (DCC), and it can result in an additional 3% to 5% markup due to inflated exchange rates. When making a purchase with a credit card, the terminal often offers the option to pay in either local currency or the traveler's home currency, such as USD.
While it may seem beneficial to pay in their home currency, this is not the case as it leads to higher costs. Instead, choosing to pay in the local currency (like euros in Europe) allows the card network and issuing bank to handle the conversion at a more favorable rate. A recent study found that after accepting the local currency, many terminals then prompt the traveler to confirm or reject the conversion on a second screen, leading to an increased likelihood of falling victim to the DCC trap.
To avoid this trap, always opt to pay in the local currency and reject the conversion on the second screen. This will generally result in the most favorable currency conversion rate and potentially save you a considerable amount of money.
Written by urgent.news from Fast Company's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
