Perils of dynamic currency conversion

Dynamic Currency Conversion 

aka DCC is often advertised has giving the consumer something needed. Peace of mind on the exchange rate or maybe just knowing the actual amount in advance. This may have been true in the 1980s but today we live in a world with internet banking that follows you around the globe. Access to exchange rates almost everywhere we look. To put it simply it's hard to see any benefit for the consumer


A recent trip to the ATM highlighted the downside of DCC. With DCC the exchange rate would have been 1.20 US$/€. In other words $1.20 US for every Euro. To emphasis just how bad that rate is the local currency exchange places had offers of  $1.16. If you'd let your own bank do the conversion it might have cost you $1.14. It may seem like pennies but it does add up over time


It Gets even worse if you are using a non US$ card. DCC insists on doing the transaction in US$. That means first you'll lose on the exchange to US$ to €. Then you'll get hit again when your bank converts to your own local currency. Pennies following pennies out the door.

Finally don't feel not using an ATM will keep you safe. Some merchants also provide DCC. Always for their benefit.

How to protect yourself? Make sure any transaction is done in the local currency. If you're in an Euro area country pick Euros. Never blindly accept a transaction in US$. Unless of course you're in the US. 

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