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Simon Calder alerts tourists about hidden charges when paying abroad

2025-06-10 06:32
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  • Dynamic currency conversion (DCC) can lead to unexpected costs that could inflate a tourist's expenses by as much as 10%.
  • Travel expert Simon Calder warns against letting merchants select the currency option, urging travelers to always choose the local currency.
  • Awareness of DCC practices is crucial for tourists to avoid unnecessary charges during their travels.

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Insights

In recent weeks, holidaymakers traveling across Europe have been warned about the hidden charges associated with dynamic currency conversion (DCC) when using credit or debit cards abroad. This practice allows tourists to pay in their home currency rather than the local currency, which might seem convenient at first glance. However, the arrangement often leads to inflated prices, with charges potentially spiking by as much as 10%. Tourists usually believe they are paying a fair exchange rate, but in reality, the costs include a significant margin pocketed by the financial institution facilitating the transaction. Simon Calder, a well-known travel expert, has taken to the media to alert holidaymakers to this common pitfall. He explains that when presented with the option to pay in GBP or EUR, travelers should always choose the local currency to avoid incurring additional costs. Calder himself experienced this issue recently, noting that a retailer inadvertently—or perhaps deliberately—selected British pounds during his transaction, resulting in an unexpected increase in his bill. Such predicaments may leave tourists feeling deceived, particularly since merchants are expected to adhere to strict regulations regarding DCC practices. Instances of this practice vary, as some merchants may not honestly represent the choice on payment terminals. For example, some card machines are specifically programmed to confuse customers into accepting the DCC service without realizing they are incurring extra costs. Even when customers attempt to be vigilant and reject currency conversion, they may find themselves tricked by misleading prompts that don't clearly indicate the financial implications of their choice. It is crucial for travelers to be aware of these tactics, as they can significantly affect overall travel budgets. As tourism ramps up during the summer season, the importance of understanding dynamic currency conversion grows. It poses a substantial financial risk for millions of travelers who might be seeking to keep to their budgets. Calder's warning is a timely reminder for tourists to stay informed about their options when paying for goods or services while abroad. Knowledge surrounding DCC could potentially save holidaymakers a large amount of money, ensuring that the focus remains on enjoying their travels rather than worrying about hidden charges. Therefore, as more tourists embark on their journeys, the need for caution and awareness remains paramount.

Contexts

Dynamic Currency Conversion (DCC) is a financial service that enables international travelers to make purchases or withdraw cash from ATMs in their home currency at the point of sale or during the transaction. By utilizing DCC, consumers can avoid the uncertainty of exchange rates when using foreign currencies, as the conversion happens in real-time and is handled directly by the service provider at the merchant or ATM. This can be particularly beneficial for travelers who prefer to see the exact cost of their purchase in their own currency, reducing confusion and providing instant clarity on expenses. The process of DCC begins when a consumer chooses to pay for goods or services. At the point of sale, the payment terminal detects the consumer's card currency and prompts them to select either local currency or their home currency for the transaction. Once the consumer selects their home currency, the DCC provider applies a conversion rate, often with an additional markup, and processes the transaction accordingly. Given that the exchange rate used by DCC providers can differ from that provided by banks or credit card companies, it is crucial for consumers to be aware of the potential cost implications when opting in for DCC. While DCC may offer convenience, it is essential for consumers to understand the potential drawbacks. One concern is the exchange rate markup, which can make transactions more expensive compared to using the local currency and allowing their bank or credit card company to handle the currency conversion. Furthermore, some consumers may unknowingly accept DCC without realizing they could have spent less by opting for the local currency. Therefore, it is recommended for international travelers to weigh the benefits and costs of using DCC and to remain vigilant about their choices while abroad. In conclusion, Dynamic Currency Conversion provides a useful service for international travelers by simplifying the currency conversion process at the point of sale. However, it is vital for consumers to approach DCC with caution due to the varying exchange rates and potential fees that may accompany the service. By making informed decisions and querying potential costs, travelers can effectively navigate their spending while ensuring they obtain the best value for their purchases.

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