Dynamic Currency Conversion - Don't be tempted to pay in your HOME currency
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- čas přidán 23. 10. 2016
- When travelling, choosing to pay in your HOME currency can be 5% more expensive than paying in the LOCAL currency.
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When someone says "for your convenience you can be charged in your home currency" then they typically mean "for our profit, you can be charged in your home currency". I've seen over 10% worse exchange rates.
I saw almost 20% in Edinburgh this summer. Unreal. And I bet most people opt for it.
I will probably never need to know this but im glad I do anyway. Also the professionalism and effort you put into your videos is not lost on us, thank you.
Thanks!
day light robbery
Thank God I watched this as I am travelling to Amsterdam next week.
love these money tip videos, super helpful and easy to understand!!
Good stuff, thanks Preet.
I already knew this and have a card with no international transaction fees, but I watched anyway since I really like your videos. Keep it up! :)
What a wonderful explanation regarding the international payments by cards
thanks a lot i was always wondering the advantage of DCC .but now i know its just another move to grab more of our money
Thank you for making this video!!
Hi, I just stumbled upon your chanel. Great job!! 😊
I'm usually very overwhelmed when it comes to numbers and finances but you explain very well!
could you please give advice on depreciating assets e.g car.
also options how to save and invest for retirement. thanks
Oh, man. I'm Canadian and I'm going to Dubai in January. Thanks for the tip, it will be really helpful!
Love the way you've explained this. Especially with those examples. Thanks for helping me learn one more new thing today :) Would you be ok with sharing the name of the tool you use for those annotations int he video?
No problem! It's called videoscribe by Sparkol
Simply superb ....👍
wow, nicely explained. thanks.
I subscribed and bell pressed.
Thank you for your channel. I always try to explain this to my friends but they don't seem to get it. This will be very useful.
I love your videos.
Can your next video be how the government creates artificial inflation and how we protect ourselves by holding anti-inflation assets?
Sometimes credit card companies convert your payment at the end of the month when they close your statement, the transaction is not converted at the rate of the date. So, depending how much the rate fluctuates, it might be better to get the local currency payment... or no?
Amazon.ca offers a credit card that has a 0% conversion rate (plus all the goody cashbackness). Would it be more economical to just use that credit card when travelling to the states?
Very interesting, straight forward and thought out as always!
I had a question though, if my credit card doesn't charge any overseas transaction fees or currency conversion fees, do I still need to watch out? (due to the merchant's upscaled currency conversion fee?)
Great question. YES: If you opt to pay in your home currency, you'll still get a poorer exchange rate than if you opted to pay in the local currency. The payment terminal company's exchange rate will almost always be worse than the credit card company's exchange rate. Remember, that extra spread gets split with the merchant. That extra revenue comes from the consumer (you)!
Great video! Again!
Thanks Shuo Shi!
But, what if the exchange rate of your credit card company is more than the exchange rate used by the merchant? How can you guarantee that your credit card company's exchange rate is always lower?
thank you for the information!
You're welcome!
Hey preet there is a new fintech company In India called Niyo Global which is working with SBM bank. They are saying that it has O% Forex markup.. so does it make sense to opt DCC?
Can you do a video on the differences on buying a car outright and dealing with depreciation. Leasing a car, and taking a car out on a PCP finance plan with a balloon payment at the end. Id love to get your take on which is the best option for losing as little as possible for having a car
and buying it cash vs loan
What if it's a contactless payment - my bank allows me to make contactless payments up to 50 EUR so which option will they choose.Also I once chose to pay in my home currency (EUR) when abroad and when I got home I googled the exchange rate and it was exactly the same as I would have paid in local currency
Very informative....
thank you!
Where has this channel been all my life.
Thanks for the kind words! :)
What software do you use to make the animated videos?
Brilliant.
But some credit card or debit card they do not have any foreigner transaction fee at all example revolut
do you have any idea how to avoid that currency conversion fee?
what is the cheapest digital way of purchasing while traveling? Should i use credit cards that offer no foreign transactions fee like home trust or are there other options out there?
I think the Home Trust option with no FX fees sounds like a reasonable choice, opting to pay in the local currency at POS. This will be among the lowest transaction cost options.
Nicely done
Thanks, Thomas!
Brillant! I was always wondering what would be the best option.. Problem solve! But is your credit card rate always better then the terminal?
It seems to be the vast majority of the time (I have never seen the terminal rate offered being cheaper). So while I can't say it's 100% of the time, it seems reasonable to say that it's high enough that your default option should always be to decline DCC and over the long time you'll likely save money and avoid the time hassle of checking every single time.
Excellent advice! I know what to do on my vacations! Great stuff you go there. I have a question also, can you do a video about The Bank of Canada. Was wondering what and how the bank works!
Thx.
yoo thats my man thanks bro .
MAN!!! your chanel is pure GOLD!! Why the fu** schools doesn't teach this
They're fraud us, legally!
No one will think of it in those seconds when you're staring at the machine, and to feel safe and confident, you'll choose your currency since you use to understand how much is it. The "how much" actual answer is (cheap or expensive).
I've been in that situation in the US at the hotel reception, the teller gave me the choice to pay by Dollars or by my currency.
Thanks man
I paid in CAD a lot until this video.. never again!
Going to thailand tomorrow, this was really handy
Enjoy! I take pics of the point of sale terminal and then can compare against my credit card statement. Do that and you'll see just how much you're saving by skipping the DCC.
I have a few questions:
1. Can I do the same with a 0 transaction fee Debit Card or is this only for credit cards?
2. Do all pos machines provide an option to either pay in the local currency or our home currency?
3. In any case, no pos transaction would force us to pay the DCC way, right?
AFAIK:
1. Yes
2. Not all - the merchant needs to have signed up for the service with their terminal provider.
3. I can’t speak for every country in the world but generally no. That wouldn’t stop a sneaky person from taking your card, inserting it and pre-selecting the option, but I have to imagine that would be pretty rare.
Great vedio,
it counts
Does the same apply for international online shopping? Should I be paying in the merchant's currency or my local currency?
Bingo. You'll generally want to pay in the local currency of the merchant you are shopping at online, too.
When we purchase goods with local currency, will the currency conversion happen at the point of purchase, or end of our statements?
I'm curious when the currency conversion happens, assuming cards with zero-foreign transaction fees.
The exchange is calculated when the transaction settles, which I believe is usually the end of the day or the day after you actually make the purchase. The specifics will be detailed on your cardholder agreement (you know, the little booklet we all throw away when we get a new card) :)
Good to know. Please make more quality videos, I really enjoy them.
that adds up if you want to buy some expensive shoes or something on vacation!
Cash only
For me
My question is: How do you save, or invest in a volatile market (i.e. The current global economical market post U.S. Election)
EXCELLENT question. I'm going to start a long series on investing in the near future.
at 7:16 you mention that the physical payment terminal processor keeps the remainder. This is not true. The Acquirer and Payment Processor are the only parties that receive any payment for a transaction. In some cases the Acquirer, terminal provider and payment processor are the same, in other cases these are three different companies.
Muffin Nl Cheers. I was debating getting into the nitty gritty of the back end but I think interchange fees deserve a separate video so I may do a follow up and link to it from this video.
Can you do a video on leasing a car vs buying a car?
It's high up on the list. Stay tuned! :)
is there EVER a situation when this is worth it? because seems to me this should be illegal.. given there is zero benefit and in effect a scam.
Banks should not be allowed to offer to pay in US currency when in a foreign country. Why is it even allowed, it only confuses the individual. What is the purpose other than to take money the spender.
How did you know that the exchange rate charged by your credit card would be 0.3561 as opposed to the exchange rate given by the payment terminal?
I checked it after the fact on my credit card statement. But it's almost ALWAYS going to be better, even though it will be unknown until you: 1) check you card statement which can be weeks away, or 2) check the daily exchange rate posted by VISA or MasterCard, or whomever is the credit card processor for your credit card. For example: usa.visa.com/support/consumer/travel-support/exchange-rate-calculator.html
Many thanks! Always wondered this and you've succinctly put my worries to rest.
Namaste
DCC transaction involves markup for vendor/service provider and may involve foreign transaction fee levied by their credit card
Hence it is better to avoid
Thanks
Namaste
I have a Niyo DCB Debit Card. It’s a zero foreign transaction fee card so I wish to use this on my first international trip.
Will all international POS machines provide me an option to choose between their local currency and my home currency? Or is there a chance the merchant can automatically charge us with our home currency and levy the DCC charge?
@@siddhikamat5356
Namaste
DCC is enabled selectively on POS machines depending on the agreement between the merchant and payment service provider
So it may not stated as a thumb rule that this would be available on all pos machines
Before transacting you can clarify if the machine has dcc enabled and if the option of choosing currency is enabled
@@onlinesaidasa9105 What if it’s not available (dcc and choosing currency is not enabled)? Does that mean I’ll have to automatically pay in my home currency getting charged with DCC? Or does that mean it’ll automatically charge me in their local currency?
@@siddhikamat5356 Namaste
DCC is an optional service. If it is enabled you will see the option for local/home currency
@@onlinesaidasa9105 would really appreciate a reply sir. Have an upcoming trip soon. Thank you😊
Does this also apply to debit cards instead of credit cards?
The real lesson to take from this is the math--really simple stuff, but you have to be aware of the factors involved. You're just checking if (Local price * Conversion Rate * Card fees) is less/greater than (DCC price * Card fees). You'll have to plug in the conversion rates and fees on your own, based on your own card, your own currency, where you are and so on. General knowledge: It's unlikely that the DCC provider is going to give you a better conversion rate than your own CC company, and you may still have foreign transaction fees based on geography if not currency.
tl;dr -- Anytime you are dealing in other currencies, be aware of currency conversion rates, as they are VERY often used to hide transaction fees. Generally, you want to find the best conversion rate possible for cash (often through an ATM withdrawal), and then make your payments in local currency.
As further example, I withdraw from a US account to my local currency. If you look at market conversion rates on XE or google (etc.), you'll see about the best possible scenario, not a rate consumers would get. My debit card tracks very close to this rate, charges me a %1 fee, plus a transaction fee of $1.50. This means if I'm withdrawing as close to the $500/transaction limit as possible, I'm paying about $6 in clearly enumerated fees, and getting near the best case scenario on conversion. The total cost of the transaction is under %2.
If I were to go shopping, however, instead of converting near the market rate (31.5~31.6 in my case), a merchant may convert at 1 USD = 30 local currency (or even lower!). Say I want to buy a jacket for 2000 in local currency -- by withdrawing at the ATM, I'd be paying effectively 2040 (2000 + %2), but by allowing the merchant to make a conversion, I could be paying over US$66... effectively 2050~2090+ in local currency, an addition of 1~3+ US dollars in cost. That might not seem like much, but over the length of a vacation, these little fees can add up to significant amounts of money very quickly; let alone those of us who reside overseas long term!
Why would you use a credit card that charges a 2.5% foreign exchange fee? There several credit cards that don't, like the Amazon.ca Visa. Then you would save even more.
Not everyone makes foreign transactions enough to get those cards, which may forego other features that are more useful depending on your spending habits.
Yep, that's what I personally have.
Sound reasonable, but my cc institute doesn't charge me the 2.5% when paying in my own currency ^^ best way is, to change the currency right away in any foreign countries
It may still be cheaper to pay in the local currency as you might get an exchange rate that is uncompetitive when opting to pay in your home currency. Also, changing money right away (i.e. at an airport kiosk) is even worse. Depending on the currency you could be looking at losing 10% over a competitive exchange rate.
nice jiob
If you don't use a credit card with 0% foreign transaction fee, you are leaving money on the table dude.
or is that just an American thing? any fellow Canadian can enlighten us?
In Canada there are only two credit cards that don't charge a foreign transaction fee (both from Chase), and one that will rebate you the foreign transaction fee in the form of extra cashback (a cellphone/cable company branded card- yes, the main way to redeem that cashback is towards your phone or cable bill).
Lol should of bought 2 boxes
Then I would've eaten both. She can't win.
you need to unload more videos at least 2 a week
Unfortunately, it's been a busy year for me. I hope to be able to upload more often in the near future. Thanks for your patience!
Total scam for suckers