Save Money By Changing This Paypal Currency Setting
When you travel to another country it is common to be asked when paying with a credit card if you want to be charged in the local currency or in US dollars. While it may seem counter-intuitive at first, the correct answer is virtually always to be charged in local currency as otherwise you are very, very likely to lose out on a less than favorable exchange rate. Of course you also want to be sure to pay with a credit card that does not charge a foreign transaction fee so you aren't hit with a roughly 3% fee by your bank every time you use your card abroad to pay in local currency.
I knew that #traveltruth, but I had never dealt with this issue from my home when using Paypal online to pay for services from another country. I'm sure some of you have already experienced this phenomenon, but if you haven't yet, be aware that you have to be on guard when using Paypal to pay for services billed in a different currency or you may end up wasting money on unfavorable exchange rates because of a Paypal default setting.
To give an example, I recently had a £600 bill to pay via PayPal and when I went to pay it I was surprised that it was displaying the price in USD.
Not only that, but I was surprised that the converted total was as high as it was, as I figured that it would convert to less than $800 USD. Turns out that the default setting in PayPal seems to be convert the transaction to the currency of the credit card you have on file, at least for Visa and MasterCard cards.
You can change the setting to bill you in the currency listed in the seller's invoice by following several steps, but it isn't an intuitive process so I'll outline how I got it done.
To change the conversion settings, log into your PayPal account and then click on "Payments" on the top bar. Next, select "Manage Pre-approved Payments". From that screen you can select a tiny "Set Available Funding Sources" link as shown below.
On the Manage Funding Sources screen you can click the hyperlink "Conversion Options" by the Visa and MasterCard cards to change their conversion settings.
You can then click off of the default setting on top and instead have Paypal bill your card in the currency listed on the seller's invoice as indicated by the second option.
Once I changed this setting I then was able to view and pay the bill in pounds with that specific credit card.
Now let's talk again about why I wanted to do that in the first place. Paypal was converting £600 into $802.03, but when I instead paid in pounds and let my bank do the conversion for me I instead paid just $775.32.
That is roughly $27 saved by paying in 'local currency' and trusting my bank's conversion rate over the payment system at hand. Have you ever dealt with this issue? Do you have any other money saving tips when dealing with different currencies?
TPG featured card
at Bilt's secure site
Terms & restrictions apply. See rates & fees.
| 1X | Choose to earn up to 1X points on rent and mortgage payments with no transaction fee |
| 2X | Earn 2X points + the option to earn 4% back in Bilt Cash on everyday purchases |
Pros
- Choice to earn up to 1 Bilt Point per dollar spent on rent and mortgage payments
- Elevated everyday earnings with both Bilt Points and the option to earn Bilt Cash
- $400 Bilt Travel Portal hotel credit per year (up to $200 biannually)
- $200 Bilt Cash annually
- Priority Pass membership
- No foreign transaction fees
Cons
- Moderate annual fee
- Designed primarily for members seeking a premium, all-in-one card
- Earn points on housing with no transaction fee
- Choose to earn 4% back in Bilt Cash on everyday spend. Use Bilt Cash to unlock point earnings on rent and mortgage payments with no transaction fee, up to 1X.
- 2X points on everyday spend
- $400 Bilt Travel Hotel credit. Applied twice a year, as $200 statement credits, for qualifying Bilt Travel Portal hotel bookings.
- $200 Bilt Cash (awarded annually). At the end of each calendar year, any Bilt Cash balance over $100 will expire.
- Welcome bonus (subject to approval): 50,000 Bilt Points + Gold Status after spending $4,000 on everyday purchases in the first 90 days + $300 of Bilt Cash.
- Priority Pass ($469/year value). See Guide to Benefits.
- Bilt Point redemptions include airlines, hotels, future rent and mortgage payments, Lyft rides, statement credits, student loan balances, a down payment on a home, and more.