Bet You Didn’t Know: Avoid Getting Suckered by International ATM’s


By Julian, author of Devil’s Advocate


I’m generally a pretty upbeat and happy guy. I like traveling and meeting new people. I like gin. And, yes, I like puppies too.

So I apologize in advance if I sound a little annoyed in today’s post. It’s only because the one thing I can’t stand is when someone tries to take advantage of people by overcharging them for something they could easily get much cheaper. Which is exactly what certain banks are doing nowadays with their international ATM’s.

In fact, just the thought of it makes me so angry… quick, show me something funny so I can get through this.

dynamic currency conversion

OK, that helped. Thanks. Let’s do this.

First, a little background…

Other blogs have written in the last few years about Dynamic Currency Conversion (also known as DCC) when it comes to using credit cards overseas. To put it simply, DCC is a complete scam. It involves the merchant offering the “convenience” of billing your credit card in U.S. currency instead of in the local foreign currency. So in other words, if you were paying for a hotel room in Europe, they’d offer to charge your card $115 instead of €100.

Sounds handy, right? Except the merchant doesn’t call attention to the fact that this “convenience” results in a horrid foreign exchange rate, usually several percentage points higher than your home bank would charge for just doing the conversion itself. Even if you used a credit card with foreign transaction fees (usually 3%), your bank would still give you a much better conversion rate than the one charged in Dynamic Currency Conversion.

But here’s the really terrible part: if you do use a card with foreign transaction fees and allow the merchant to bill you in U.S. dollars via DCC, your credit card company will still charge you the 3% foreign transaction fee. So you’ll get stuck with a bad exchange rate and have to pay the credit card company fee as well. Ugggghhhh!

dynamic currency conversion

Thank you. That calmed me down for the moment.

Now DCC has filtered down to ATM’s too.

Because credit card companies automatically do currency conversions at (relatively) decent exchange rates, it’s usually easiest to use a no foreign transaction fee card for all your purchases when overseas. But often it’s necessary to have a little bit of cash for small purchases or places that don’t take credit cards.

My general M.O. (that’s Method of Operation, not Money Order) has been to withdraw a small amount of cash when I land at the airport or soon thereafter and use that cash as little as possible while focusing most of my spend on a no foreign transaction fee card. But foreign ATM’s — especially the ones at airports and other transit hubs — have gotten extremely persistent at promoting the DCC ripoff.

I’ve been to Europe twice in the last 6 months and I’ve noticed the ATM’s there are getting more and more aggressive about trying to trick you out of your money. When I was in Paris, I ran into an ATM at Gare du Nord train station that advertised itself as having “No ATM Withdrawal Fees!” Which was true. Except here’s what it offered me when I tried to withdraw €50 (which would have been about $55 via my bank’s exchange rate in effect at the time)…

dynamic currency conversion
Apologies for the lousy photo. I was very upset.

Sure, there’s no ATM withdrawal fee… but instead there’s a 3% conversion fee.

Now, you might be thinking to yourself “OK, so if you paid $57 instead of $55, that’d be an extra $2. That’s not such a big deal. It’s about the same as a regular domestic ATM withdrawal fee anyway, right?”

Except that unlike a flat ATM fee, this fee scales upward. The more you take out, the worse it gets.

If I had been taking out €100 instead of €50, the fee would be $4. At €200 it’d be $8. At €300 it’d be a whopping $12 just for the privilege of getting my own cash.

And the DCC at this particular ATM wasn’t even that bad. I ran into one at the Frankfurt Airport that was trying to charge me more than 6% extra for the currency conversion. It was super persistent too. Every time I pressed the button to decline DCC, another screen would pop up asking me if I was sure. And another. And another! Arrrrrghhhh!

dynamic currency conversion

Nope, didn’t help this time. I’m too livid. Sorry.

How do you avoid DCC?

Both ATM’s and merchants offer DCC as an option, not a requirement, so the easiest way to avoid DCC is to simply decline it. But you really have to be paying attention to what you’re doing because they’re using every trick in the book to get you to push the wrong button. On that Frankfurt ATM I mentioned above, the button that led to DCC was colored in green while the one that discharged money via the regular conversion process was in red. If you were moving quickly, it would be very easy to push the green button as the obvious choice and get stuck with a stupidly high conversion rate.

Banks and financial institutions have a reputation that is somewhere between cockroaches and Congress, and Dynamic Currency Conversion is a perfect example of why it’s well deserved. So please, avoid Dynamic Currency Conversion at both credit card merchants and ATM’s. Don’t let them take more of your money than absolutely necessary.

Did you know about the Dynamic Currency Conversion scam?

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