Using credit card oversea

[Bluepica]

When you use your credit card buying something oversea, sometimes the merchant will ask do you want to charge in SGD or the local currency.

Which is better??

[Incom]

  On 10/20/2015 at 9:35 AM, Bluepica said:

When you use your credit card buying something oversea, sometimes the merchant will ask do you want to charge in SGD or the local currency.

Which is better??

 

Be it online or shopping while on tour, always go for charging in the local currency of the country.

 

Charging in SGD for online shopping for sites located in overseas, the rates they used are always higher compare to the credit bank is charging.

 

While traveling, charging in SGD means the system will go thru currency conversion twice which means you will be likely be paying more conversion fees and the rates is normally higher.

[Spring]

  On 10/20/2015 at 9:35 AM, Bluepica said:

When you use your credit card buying something oversea, sometimes the merchant will ask do you want to charge in SGD or the local currency.

Which is better??

 

In general, I think local currency better cos your credit card bank will use their rate to convert to SGD whereas if charge in SGD, the merchant will likely use their own rate which is normally worse.

 

That said, there could be exceptions so you could do a quick calculation to see which is better. Credit card bank will normally be 150-200 points away from interbank rate eg. if USD/SGD interbank rate is 1.40, credit card bank will be around 1.4150 to 1.42 thereabouts. Then, compare with the merchant rate and you should be able to determine which is better.

 

One disclaimer though is that merchant rate used is final whereas credit card bank rate may not be the current rate as it will only be determined when it's presented by merchant for payment which could work for or against you. 

 

Quite complicated hor......

[Bluepica]

http://www.dbs.com.sg/personal/cards/cards-rates-fees.page

 

I found this on DBS website.

If charge in local currency, charges 2.5% above visa foreign exchange rates for visa /master. Amex pay 3%.

If charge in SGD, we pay 0.8% above foreign exchange rates set by merchant bank on that day.

Means paying in SGD still cheaper. If my interpretation is correct.

[Lotr]

  On 10/20/2015 at 10:36 AM, Bluepica said:

http://www.dbs.com.sg/personal/cards/cards-rates-fees.page

 

I found this on DBS website.

If charge in local currency, charges 2.5% above visa foreign exchange rates for visa /master. Amex pay 3%.

If charge in SGD, we pay 0.8% above foreign exchange rates set by merchant bank on that day.

Means paying in SGD still cheaper. If my interpretation is correct.

 

Good info above!!!

 

however, I feel really hard to say which will be lower in the end as we won't know what will be the visa foreign exchange rates or the foreign exchange rates set by merchant bank.

[Soya]

Nowsadays i juz pay full cash or use ATM to withdraw. Cheaper than using CC.

 

[Hotamp]

  On 10/20/2015 at 12:23 PM, Soya said:

Nowsadays i juz pay full cash or use ATM to withdraw. Cheaper than using CC.

ya I try not to use credit card when overseas unless there is a need too , the bank will sure earn from the exchange rate spread be it converting the bill to sg or local currency.  save the hassle and to avoid fraud  just use cash.

[Kangadrool]

reckon it's nearby country like MY?

 

I will use Maybank CC and pay in MYR.

 

  On 10/20/2015 at 10:36 AM, Bluepica said:

http://www.dbs.com.sg/personal/cards/cards-rates-fees.page

I found this on DBS website.
If charge in local currency, charges 2.5% above visa foreign exchange rates for visa /master. Amex pay 3%.
If charge in SGD, we pay 0.8% above foreign exchange rates set by merchant bank on that day.
Means paying in SGD still cheaper. If my interpretation is correct.

 

[Blueray]

I think the charges and rates they use are really not good.

 

So prefer to use cash if possible.

 

Recall some years back there was some class action in US against Visa or Master re their charges and exchange rates or something.

[sbliew]

One thing to note is that if you use a credit card that has extra rewards for foreign currency transactions, it seems that this benefit goes away if you convert it to Singapore dollars at the point of purchase.

[Yslim79]

 

 

Maybe this will help explain ...

 

https://en.m.wikipedia.org/wiki/Dynamic_currency_conversion

[Sabian]

  On 10/20/2015 at 9:35 AM, Bluepica said:

When you use your credit card buying something oversea, sometimes the merchant will ask do you want to charge in SGD or the local currency.

Which is better??

Always use the foreign currency option. Never opt for home currency.

 

Why? Bec the bank providing the card swiping terminals have appointed a DCC provider to enable a home currency to be offered as an "option". Knowing human psychology, being told the exact amount in your home currency always feels more comfortable than opting for the foreign currency option and not knowing the exact amount.

 

But if you're in China, use AMEX. Why? Because in China, 99% of terminals have been rigged to charge you in your home currency regardless of what you choose if your card is Visa or Mastercard.

 

AMEX owns the entire payment network so there is no way a bank can hijack the transaction. VISA and MC allows its partners to hijack the transaction.

 

DCC (Home Currency) rates are always higher bec they take the wholesale Visa/ Mastercard spot rate and tag on 4% to 5% more so the eventual rate will be higher than even AMEX. The 4-5% that you get carroted for will be split between the shopkeeper,the shopkeeper bank that provides the card swiping terminal and the company providing the DCC service.

 

Now if you get charged in your home currency, the bank that issued you the credit card loses the commission it'd have otherwise earned so now if your card transaction is processed by an overseas terminal in SGD, you will be charged an additional fee.

 

I kenna DCC in Hong Kong Airport shop (Relay) although I chose HKD. So beware of Relay.

[Ben5266]

I use SGD. Why?

Easier to do my expenses claim.

Otherwise, I will have to wait for my cc statement to come before I could claim the correct amount. Or use internal rate which I might be subsidizing my company.

Finance dept also save time. Need not verify the rate I use. Just look at the charge slip. 

[Lala81]

  On 10/20/2015 at 6:14 PM, Sabian said:

Always use the foreign currency option. Never opt for home currency.

 

Why? Bec the bank providing the card swiping terminals have appointed a DCC provider to enable a home currency to be offered as an "option". Knowing human psychology, being told the exact amount in your home currency always feels more comfortable than opting for the foreign currency option and not knowing the exact amount.

 

But if you're in China, use AMEX. Why? Because in China, 99% of terminals have been rigged to charge you in your home currency regardless of what you choose if your card is Visa or Mastercard.

 

AMEX owns the entire payment network so there is no way a bank can hijack the transaction. VISA and MC allows its partners to hijack the transaction.

 

DCC (Home Currency) rates are always higher bec they take the wholesale Visa/ Mastercard spot rate and tag on 4% to 5% more so the eventual rate will be higher than even AMEX. The 4-5% that you get carroted for will be split between the shopkeeper,the shopkeeper bank that provides the card swiping terminal and the company providing the DCC service.

 

Now if you get charged in your home currency, the bank that issued you the credit card loses the commission it'd have otherwise earned so now if your card transaction is processed by an overseas terminal in SGD, you will be charged an additional fee.

 

I kenna DCC in Hong Kong Airport shop (Relay) although I chose HKD. So beware of Relay.

 

Thanks. Great info there.

I'd still use CC for big things like the hotel stay as i'd rather not get targeted by pickpockets or snatch thief.

 

These misc charges i just count it as part of the travelling cost.

[Stratovarius]

Local currency. I've tried both and found out conversion rate is higher when they convert for you in the store/hotel.

[Sabian]

  On 10/21/2015 at 2:30 AM, Lala81 said:

Thanks. Great info there.

I'd still use CC for big things like the hotel stay as i'd rather not get targeted by pickpockets or snatch thief.

 

These misc charges i just count it as part of the travelling cost.

I actually try to use CC for everything, local and overseas. I go after air miles. Unless the currency is really going to appreciate sharply against the SGD, I will use cards.

 

Partly for security reasons, partly there are cards for that allows me to earn 4 miles (I value 1 air mile at 2 cents) and they more than compensate for the 3% difference if I had used cash.

 

I don't carry my usual wallet when I am overseas (including Vietnam).

 

Just the couple of cards I want to use and some buffer cash, all in different pockets/ socks. When I travel, I do have an old dummy wallet in my bag though as a "red herring". (excluding Vietnam)

[Lala81]

  On 10/21/2015 at 3:26 AM, Sabian said:

I actually try to use CC for everything, local and overseas. I go after air miles. Unless the currency is really going to appreciate sharply against the SGD, I will use cards.

 

Partly for security reasons, partly there are cards for that allows me to earn 4 miles (I value 1 air mile at 2 cents) and they more than compensate for the 3% difference if I had used cash.

 

I don't carry my usual wallet when I am overseas (including Vietnam).

 

Just the couple of cards I want to use and some buffer cash, all in different pockets/ socks. When I travel, I do have an old dummy wallet in my bag though as a "red herring". (excluding Vietnam)

 

Ha you guys always travelling or on the move.

I don't travel much.

This year haven't even crossed the causeway haha.

 

2010 - Japan

2011 - NZ

2012 - nil

2013 - nil

2014 - Bali, Malaysia, Australia (some kind of record as i've hardly even traveled twice a year before)

2015 - nil

 

Gosh, hope my kid grows up faster. 

Edited October 21, 2015 by Lala81

[Lala81]

@Sabian, actually I cut and paste your forum post to my parents who are going china this week.

 

So this is my dad's reply,

 

 

  Quote

I always use cash! Or if need to charge,use BOC UnionPay. Always RMB, convert to day,they charge.

 

Will this kana the DCC thing also? For benefit of china travellers. Cos i avoid going china hahaha...

 

 

Edited October 21, 2015 by Lala81