Warning over 10% price hike trick when paying by card abroad this summer
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Why travellers should never pay in pounds on holiday card transactions
- Holidaymakers could see costs rise by 10% this summer due to “dynamic currency conversion” (DCC), which allows traders to profit from people paying with plastic.
- DCC, or “cardholder preferred currency,” offers the option to pay in pounds (GBP) at a fixed conversion rate, appealing to travellers who want to know the exact sterling amount but this includes a margin of up to 10% pocketed by the bank and merchant.
- When asked if travellers would like to pay a sterling amount rather than the local currency, they should always say ‘No’. Merchants are supposed to follow strict guidelines when offering DCC, but some traders are not playing fair by presenting misleading screens on card machines.
- In some instances, proprietors may not allow customers to choose, automatically selecting “GBP” on the machine and adding 10% to the cost.
- When withdrawing cash abroad, ATMs also offer DCC, which should be declined to avoid the inflated exchange rate.