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I fell for dynamic currency conversion — reader mistake story

Jan. 17, 2020
4 min read
I fell for dynamic currency conversion — reader mistake story
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Today, I want to share a story from TPG reader Sarthak, who was charged more than he expected for a recent hotel stay:

I spent five nights at the Westin Gurgaon in New Delhi for work in December. My total bill was 85,895 Indian rupees (around $1,206). At checkout, the front desk agent asked me what currency I wanted to pay in; I asked for U.S. dollars because I assumed that would make it easier to submit my expenses for reimbursement. Little did I know the hotel had its own currency exchange rate of 63 rupees to 1 dollar versus the market rate of around 70 — roughly a 10% difference.

I was charged $1,355 because I opted to pay in dollars, and I didn’t realize until I was submitting my expense report. I then looked back at another stay at the Shangri-La Hotel in New Delhi and noted the same discrepancy in exchange rates. I ultimately called Westin to resolve the issue; fortunately, they agreed to reverse the charges and rebill me in rupees.

Had I not noticed the exchange rate while submitting my expenses, I would have been out $150 without realizing. This would never have caught my attention on a personal trip (where I would not be seeking reimbursement). I now realize it is always better to opt for local currency when paying with a foreign credit card, especially those that have no foreign transaction fees.

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The payment option Sarthak encountered is a "service" known as dynamic currency conversion, and it's a scourge upon international travelers. The idea is that merchants give you the option to process a transaction in your home currency instead of the local currency, and then profit by offering a miserable exchange rate between the two. Unscrupulous establishments will try to sell you on the convenience of dynamic conversion or charge you in your home currency without asking — I've even encountered foreign merchants who seemed to genuinely believe they were doing me a favor by transacting in U.S. dollars. To avoid getting overcharged, make clear that you want to pay in the local currency, and check your receipts afterward to confirm.

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A common misconception about dynamic currency conversion is that you can circumvent foreign transaction fees by paying in your home currency. Unfortunately, that's not the case, as those fees are typically imposed according to your location rather than the currency you use. Paying in your home currency on a card that incurs foreign transaction fees is doubly disadvantageous: you get charged a higher price due to the poor conversion rate, and then pay fees based on that higher price. Do yourself a favor when you travel internationally: avoid dynamic currency conversion, and use a credit card with no foreign transaction fees.

Related: This sneaky debit fee could cost you on your next foreign transaction

I appreciate this story, and I hope it can help other readers avoid making the same mistake. In appreciation for sharing this experience (and for allowing us to post it online), I’m sending Sarthak a gift card to enjoy on future travels, and I'd like to do the same for you. Please email your own travel mistake stories to info@thepointsguy.com, and put "Reader Mistake Story" in the subject line. Tell us how things went wrong, and (where applicable) how you made them right. Offer any wisdom you gained from the experience, and explain what the rest of us can do to avoid the same pitfalls.

Feel free to also submit your best travel success stories. If your story is published in either case, I’ll send you a gift to jump-start your next adventure. Due to the volume of submissions, we can't respond to each story individually, but we'll be in touch if yours is selected. I look forward to hearing from you, and until then, I wish you a safe and mistake-free journey!

Featured image by (Photo by Christine Roy/Unsplash)

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
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Rewards

2 - 10X points
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Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
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Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023