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Tip: Avoid Dynamic Currency Conversion at International ATMs

Jan. 24, 2017
2 min read
Tip: Avoid Dynamic Currency Conversion at International ATMs
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When you're traveling overseas and make a purchase with a US credit card, the credit card terminal at many merchants will give you the option to pay in either the local currency or US dollars. Sounds like a great way to avoid those pesky credit card foreign transaction fees, right?

Except in this case, the cure is worse than the disease. If you choose this option — known as Dynamic Currency Conversion, or DCC — the markup on the conversion will be a great deal higher than the standard 3% credit card fee you might pay for foreign transactions. In fact, in our experience, it can be as high as 8%! And to add insult to injury, you might still get charged the foreign transaction fee because some credit cards specify those fees are based on the merchant's country or where the transaction takes place, not the currency involved.

So when making credit card purchases overseas, you'll always want to make sure you're being charged in the local currency, and simply bring a credit card with no foreign transaction fees whenever you travel.

However, that's not the end of the story, as this insidious DCC disease has spread to overseas ATMs as well...

It's the same sleight-of-hand at work — when you land in a foreign country and go to withdraw money from the ATM at the airport or train station with your debit card, the machine asks if you'd prefer to have your bank account debited in your own currency. Trust us, you don't. The deal is even worse in this case because there are plenty of banks that don't have a significant foreign transaction fee on ATM cash withdrawals in the first place.

So the next time you're traveling internationally, make sure you pay close attention after swiping your credit card or clicking through the ATM screen. Don't become a victim of DCC!

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