The dangers of dynamic currency conversion

burning dollarProcessing a credit card charge for overseas purchases used to be pretty simple. You swiped your card while on vacation, your bank changed the money from pesos or euros into greenbacks, and the amount you’d spent appeared on your bill. Maybe you paid a small conversion fee, but you also got a competitive exchange rate.

Not anymore. Just ask Jae Cuadra, who recently tried to buy a round-trip train ticket between the Swiss cities of Interlaken and Lauterbrunnen. The purchase, at a train station in Interlaken, went on his Capital One Visa card, which doesn’t charge to convert foreign currencies. But “for the first time, I was offered a choice,” says Cuadra, a registered nurse from Westbury, N.Y. “Did I want to pay in dollars or Swiss francs?”
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Not so funny money tricks the travel industry likes to play

Maks Narondeko/Shutterstock
Maks Narondeko/Shutterstock

Hold on to your wallet. Businesses don’t just want to get their hands on your cash when you’re on the road — they also want more of your money, and on their terms.

Take what happened to Gordon Angell when he was visiting La Paz, Mexico, recently. Many restaurants in town display the “Visa” and “MasterCard” stickers, signifying that they accept credit cards.

But on Angell’s first evening, after finishing a meal at a restaurant, his server informed him the credit card machine didn’t work, and pointed to an ATM. He paid in pesos.

“The following evening we went to another restaurant called The Three Virgins,” he says. “We made sure that we asked them if they accepted credit cards and they said ‘yes.’ Surprisingly, when we offered to pay our bill, it was a repeat of the previous evening. Their machine was ‘not working.’ They told us to use the ATM.”
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Exchange rate rip-offs, and how to avoid them

As Jay Berman and his wife were checking out of the Henley House in London last month, a clerk asked if they wanted to pay their bill in dollars. It seemed like a good idea at the time, because they’d avoid Bank of America’s three percent foreign transaction fee.

Or so they thought.
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A foreign transaction fee for a U.S. travel booking? Now you’re roaming alone

Brandy Hamill knows the importance of reviewing her credit card statement after booking a trip. If she hadn’t taken a look at hers, she might have missed the strange surcharge when she booked a flight on Travelocity.

And when I say “strange” I definitely mean it in every sense of the word. Weird, odd, mystifying — and a little troubling.

Hamill picks up the story:

I booked a roundtrip flight from Los Angeles to Toronto for December through Travelocity with Air Canada.

However, the charge showed up on my credit card from a ‘foreign’ location so my bank charged me a 3 percent foreign transaction fee. I was surprised, because I had booked with Travelocity and didn’t expect a foreign transaction fee, so I attempted to get a refund for the fee.

Hamill spoke with two Travelocity representatives and three supervisors for a total of nearly two hours. The online agency conferenced the bank on their call to resolve the transaction fee that had apparently been wrongly charged to her card.

In the end Travelocity gave me the $15 service fee back and a $50 gift card toward a future package from them (they offered $25, but I made a cogent argument I could just get charged a foreign transaction fee when using my gift card).

However, it should be noted that they would not change the charge from Air Canada, and from my understanding had no power to do so. They also did not want to give me the full amount of my foreign transaction fee, which came to a total of $16.71.

I contacted Travelocity on Hamill’s behalf. Here’s its response:

Chris, this is a technical error, as all of our charges are supposed to be generated out of San Antonio. If that had happened correctly, the customer would never have been charged the foreign transaction fee.

When our Customer Service Team refunded $15, they were actually refunding the Travelocity service charge, so we’ve submitted a refund request for an additional $1.71, to fully compensate the customer for the fee they were charged and alerted those who made the initial refund aware of the discrepancy. We will also explain this to the customer.

A couple of observations: First, I’m happy that Travelocity fully compensated this customer for her inconvenience.

Second, it’s probably not worth two hours of your time to recover a few dollars. Think of how much employee time Travelocity spent in this epic battle over $16? Wouldn’t it have been easier to credit the customer quickly?

And finally, and most importantly, Hamill was correct to review her credit card statement after making the booking. That’s a lesson we can all take away from her bizarre foreign transaction fee odyssey.

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