Pay in Local Currency or Home Currency?

[Worldtraveller8888]

Just back from HKG and when offering my credit card to pay for the hotel, I was asked if I wanted to pay in HK Dollars, or in Australian Dollars.

I know this has been around for a while, but was wondering if anyone knew what the exchange rate is like if you elect to pay in Aust Dollars, or if it makes any difference what you choose.

This,

WT

 

[Dr Hiro]

Hi WT:

As a rule, I almost ALWAYS elect to pay in the local currency (HKD in this case). When you pay directly in AUD, the exchange rate is usually around 4.5% worse than the interbank rate. On top of this, most Australian Banks that issued your card will again charge you a 2-3% foreign transaction fee (even though you paid you AUD, but the transaction took place overseas).

You were lucky (but the hotel did the right thing) by being offered a choice. I have been conned 2-3 times where the merchant's credit card machine charged me in AUD without offering me the choice. The machine is programmed to know the issuing country of the credit card, and charges (AUD in this case) by default.

Most merchant's credit card voucher will tell you how much you will be charged in HKD and/or AUD. So you can always check the amount (thus the exchange rate) before signing on the dotted line.

You may already have heard that the Wizard Mastercard and the NAB Gold Visa Debit card charges no foreign transaction fee. And to check the exchange rate: xe.com seems to be the favoured site.

 

[haydensydney]

I was offerred this when checking out of our hotel in coughet just recently - I went with the AUD option thinking that there was some financial benefit to me in doing so.

*checks amex bill*

 

[yohy?!]

+1 2 weeks ago in NZ the dynamic rate was 5% worse than what I got from my Wizard MC.

1 restaurant and 1 hotel tried to charge in AUD saying it was 'the machine's fault'...I had to show them how to cancel the AUD choice on the pinpad.

 

[markis10]

Never say yes to home currency conversion, the rate is shocking!

 

[haydensydney]

Sigh....

the bill was about $4k so we were at a disadvantage paying in AUD... oh well - lesson learnt, will know for next time :evil:

 

[NM]

I was offerred this when checking out of our hotel in coughet just recently - I went with the AUD option thinking that there was some financial benefit to me in doing so.

*checks amex bill*

Yes, there was a financial benefit ... just for the hotel and not for you :evil:

 

[Mal]

I know this has been around for a while, but was wondering if anyone knew what the exchange rate is like if you elect to pay in Aust Dollars, or if it makes any difference what you choose.

It depends on the bank involved, but I'm not sure I've ever seen any advantageous to me.

BTW, with some cards now charging fees for "overseas" transactions in AUD - people can be stung twice.

 

[Fifa]

...I had to show them how to cancel the AUD choice on the pinpad.

Which keys do you (or they) need to press:?:

 

[Dr Hiro]

Depending on the machine, something to the effect of "Confirm Currency Conversion?" will pop up on the merchant's machine.

The trick is to say "NO" or press "Cancel". Pressing Enter (which was what most cashiers do) usually equates to agreeing to pay in home (AUD) currency.

I had to show the cashier this in Hong Kong. Needlessly to say, she had to speak to her supervisor cause she thought we had just cancelled the entire transaction.

BTW, I thouth DCC was only available for Visa/MC, but not AMEX???

 

[turtlemichael]

If purchasing a Jetstar ticket originating in Japan (and maybe other os places as far as I know) I was offered the option of paying in Australian dollars rather than yen. Both amounts were quoted. I was using a Visa Card. The Aussie dollar amount was substantially less than my quick conversion of what I was likely to be charged by Visa after conversion if I paid in yen. The Australian amount was stated to be full and final.

In the end I opted to pay in yen, and it hit my credit card about 3% higher than the quoted Australian dollar mark. I am now wondering if I did the right thing.

 

[Dr Hiro]

Hi Turtlemichael

Sorry to hear abt your experience.

I guess there are 2 points that I can offer regarding that:

1. The AUD has been rising steadily over the past 2 weeks, both against the USD and JPY. Last I checked, 1AUD= 93.5USC and 80JPY. To complicate matters more, most credit cards do not necessarily use the exchange rate of the transaction date. Most are delayed by about 2-3 days, and therefore the exchange rate could very well have varied. I have experienced a 3-wk delay in the transaction being posted when purchasing electronics in Japan. And by that time, the exchange rate on the market had changed by more than 5%!

2. If you had selected to pay in AUD. You would most likely have also been charged 2-3% commission on your credit card. Assumming the card was issued in Australia and it's not Wizard or NAB Gold.

 

[Worldtraveller8888]

Thanks all for your replies. It sounds like it was as I suspected - beneficial for everyone but me!

WT