Dynamic currency conversion is used to describe the process (or con in my language) by which credit / debit card holders, when making a payment abroad, have the cost of a transaction converted to their home currency at the point of sale.

This neatly links in to another blog I wrote about whether you should pay in your home currency or the local currency when you’re abroad.

The most diligent of individuals can get caught out (and I have been although the exchange rate was ok).

I would have still preferred to pay in the local currency, and I was presented with an invoice that led me to believe I would.

HOW IT WORKS

In essence, when you are abroad and pay by card you may / may not be given the opportunity to pay in the local currency or GBP sterling. If you are charged in sterling, you will usually be given a worse exchange rate in favour of the retailer.

The retailers often ask nicely in a way that infers they are doing you a favour by giving you the choice to pay in your home currency.

Always insist at the point of payment that you want to pay in the local currency to get the best exchange rate given by your card provider. This is known as the market rate.

YOUR OPTIONS

An alternative would be to use a Revolut card. This card lets you spend abroad in over 150 currencies with the interbank exchange rate (which means you get the perfect exchange rate every time). No fees apply in 29 currencies up to £5K a month.

Have you been caught out by this? What options do you prefer using to avoid the various traps and scams when you travel abroad?

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