credit card exchange rate - tourist or interbank?


A

Alan Campbell

Hi,

If I were to use a UK credit card to buy anything abroad, I would get
charged 2.75% commission.
Do banks use the tourist or the interbank rate when converting foreign
credit card purchases to sterling?

Reason I am asking is that I thought 2.75% seemed expensive but if
banks use the interbank rate then it is actually cheap -

Current M&S £->$ tourist rate = 1.815
Current interbank £->$ rate = 1.8768
So M&S effectively charge 3.29% commission so if the bank uses the
interbank rate, I am better off using my credit card.

Yes, I know I should get a Nationwide card but it isn't worth it for
one trip.

Thanks,

Alan.
 
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A

Alec

Alan Campbell said:
Hi,

If I were to use a UK credit card to buy anything abroad, I would get
charged 2.75% commission.
Do banks use the tourist or the interbank rate when converting foreign
credit card purchases to sterling?

Reason I am asking is that I thought 2.75% seemed expensive but if
banks use the interbank rate then it is actually cheap -

Current M&S £->$ tourist rate = 1.815
Current interbank £->$ rate = 1.8768
So M&S effectively charge 3.29% commission so if the bank uses the
interbank rate, I am better off using my credit card.

Yes, I know I should get a Nationwide card but it isn't worth it for
one trip.
Why not? It doesn't cost you anything (no fees) and you can keep the card
for subsequent trips. Their rate is consistently within 0.5-1% of interbank
rates in my experience (Europe, N America, Far East).
Most other cards charge 2.75% 'Foreign Exchange Fee', which is usually based
on interbank rates. But people have found that by using two different cards
on the same date, they were charged different rates when statements arrived,
so the base rates clearly vary among card issuers. Yes, even with that
charge, it's cheaper to use your card abroad for purchases, but not for cash
advance on a credit card, but rates fluctuate daily and you are charged the
rates ruling on the day that your transaction hits your account, which can
be up to a few days after purchase. So you may lose or gain by using your
card, depending on rates movement.
Also in some countries (notably Ireland), many service establishments,
through their card handler, do a 'dynamic currency conversion' and bill your
card direct in sterling, using a rate which is 2-3% worse than interbank. It
hits you in the pocket if you have 'no foreign fee' card like Nationwide and
Liverpool & Victoria.

Alec
 
P

Phil Richards

Alec said:
Also in some countries (notably Ireland), many service establishments,
through their card handler, do a 'dynamic currency conversion' and bill your
card direct in sterling, using a rate which is 2-3% worse than interbank. It
hits you in the pocket if you have 'no foreign fee' card like Nationwide and
Liverpool & Victoria.
Can anyone confirm whether or not retailers in Ireland in particular where
I've been stung with this "Dynamic Currency Conversion" technique:

(a) Have to ask you first whether you want your card billed in GBP or EUR
(b) If they don't, you can instruct them to charge the card in EUR?

Thanks
 
A

Alec

Phil Richards said:
Can anyone confirm whether or not retailers in Ireland in particular where
I've been stung with this "Dynamic Currency Conversion" technique:

(a) Have to ask you first whether you want your card billed in GBP or EUR
(b) If they don't, you can instruct them to charge the card in EUR?
They are supposed to, but often they don't (in many cases the till operators
know nothing about it!).
Yes, you can demand they void the transaction and resubmit it in euro (or
whatever the local currency).
I hear Harrod's in London do this with non-UK cards, but customers are asked
first.

Alec
 
J

john boyle

Alec said:
But people have found that by using two different cards
on the same date, they were charged different rates when statements arrived,
so the base rates clearly vary among card issuers.
Yes, but this is insufficient evidence to be sure you are correct. The
intermediate variables, i.e. retail outlet, merchant service, foreign
bank and time of day, etc., all need to be the same as well before you
can deduce that rates are *clearly* different.
Also in some countries (notably Ireland), many service establishments,
through their card handler, do a 'dynamic currency conversion' and bill your
card direct in sterling, using a rate which is 2-3% worse than interbank. It
hits you in the pocket if you have 'no foreign fee' card like Nationwide and
Liverpool & Victoria.
Quite. Thats just happened to me! but after a good meal and, er, a drink
or two, I wasnt in the mood to really argue the toss. Annoying, none the
less.
 
C

Chris Blunt

Can anyone confirm whether or not retailers in Ireland in particular where
I've been stung with this "Dynamic Currency Conversion" technique:

(a) Have to ask you first whether you want your card billed in GBP or EUR
(b) If they don't, you can instruct them to charge the card in EUR?
I don't know about Ireland, but I've done that in Thailand. I refused
to sign a charge slip which had been converted to GBP at a ripoff rate
and they just did me another one in local currency. The saving when it
was eventually converted to GBP by Nationwide at a very reasonable
rate was quite considerable.

Chris
 
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P

Phil Richards

Alec said:
They are supposed to, but often they don't (in many cases the till operators
know nothing about it!).
That's what happened last time I got caught out. Sales assistant was
oblivious to the way the card terminal charged my card in GBP rather than
EUR.
Yes, you can demand they void the transaction and resubmit it in euro (or
whatever the local currency).
It was too late in this case. The transaction got authorized both slips
printed off and completed on the card terminal before I signed the slip.
Therefore too late to void the transaction.
 
T

Tim

It was too late in this case. The transaction
got authorized ... before I signed the slip.
Hmmm. *Who* was it who authorised
this transaction, on your card?? :-(
 
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A

Alex

It was too late in this case. The transaction got authorized both slips
printed off and completed on the card terminal before I signed the slip.
Therefore too late to void the transaction.
Not at all. The transaction can be reversed within a certain period
(transacion effectively never happens), or refunded if outside this period.
 

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