SAY NO TO CURRENCY FEE
As sterling falls a rip-off makes deals worse, so if asked to pay in pounds…
HOLIDAYMAKERS are being ripped off in a £380million scam – by making payments in pounds rather than the local currency.
Shops, restaurants and even cash machines routinely add up to 10 per cent on bills presented to tourists using a so-called ‘dynamic currency conversion’ trick. The practice allows retailers and banks to set their own conversion rate, which is usually worse than the one applied by your credit or debit card issuer.
Avoiding this ruse is all the more vital in the wake of the cut to the Bank of England base rate, which sent the pound plunging on money markets, pushing up the cost of buying dollars and euros.
At least one in five British tourists is duped into paying in pounds on their cards each year, with the choice being offered as a ‘service’ allowing them to pay in a currency they feel comfortable with.
Worse, many hotels are presenting Britons with terminals that already have the bill calculated in sterling, despite retailers and ATM providers being obliged to tell you that you have the option not to take the sterling deal.
Always say ‘no’ to a sterling bill – instead demand to pay in the local currency. The UK Cards Association says: ‘When taking the non-sterling option you get the daily rate set by Visa or MasterCard, say, which is linked to the interbank rate – a wholesale price agreed between banks.’
The bank that issued your card often then takes a cut – typically adding a 2.75 to 2.99 per cent fee to the exchange rate. This is on top of other charges it might add, such as fees for using a cash machine.
Angus Duncan, 56, was duped by a cashpoint in Lisbon just a week after the Brexit vote when the pound was in turmoil against other currencies.
Angus, who works in finance and was travelling on business, says: ‘I was taking out €100 and was presented with two options – take its deal in sterling or go with the usual euro deal. I was flummoxed and took the sterling deal.
‘When I checked my statement back at home in Clapham I realised I had got €1.09 to the pound when the average rate that day was €1.20, losing me a tenner. I won’t be doing that again.’
Research for The Mail on Sunday by currency exchange firm FairFX found paying in pounds adds an average 6 per cent to the bill – but this can be as high as 10 per cent. Britons spend £24.6 billion a year on their cards abroad. The 6 per cent average for the more than one in five tourists regularly duped adds up to £380million. Sharon Flaherty, 35, from Cardiff felt tricked after spending £35 on a fondue set at Copenhagen airport a couple of years ago. The marketing consultant says: ‘I thought the assistant was being helpful by asking if I’d like to pay in pounds rather than Danish kroner. Only later did I realise I had been duped. I worked out that if I had paid in kroner I could have saved nearly a fiver.
‘Had I not woken up to the practice I could have spent a small fortune over the years.’
FairFX boss Ian Strafford-Taylor says: ‘Dynamic currency conversion is nothing but a rip off – duping holidaymakers into paying unnecessary fees by offering poor rates. Consumers must be vigilant and say no if the pound option is offered.’
Some tourists are billed in pounds without even being asked. They are advised to scrutinise the card reader and refuse to pay if it is not in the local currency.
Bob Atkinson at the TravelSupermarket website says: ‘Your credit or debit card issuer may also levy overseas charges – yet another hidden fee – so use a prepaid currency card or plastic designed for abroad. Comparison websites can reveal the best deal.’
At theukcardsassociation.org.uk you can find a guide to using cards abroad. Click on the ‘consumer’ tab.