Exchange rates & CCs

Samtheman1k · 4 Apr 2007 at 13:12

I just paid for a holiday in a foreign country. I did a currency check, and the holiday, which cost 6000 Norweign Kroner is equal to around £500. However, on my credit card, they used a different rate, and it ended up costing me around £550.

How come banks can use a different currency rate than what is the 'official' rate? Can banks just use whatever exchange rate they like?

growse · 4 Apr 2007 at 13:30

Samtheman1k said:
I just paid for a holiday in a foreign country. I did a currency check, and the holiday, which cost 6000 Norweign Kroner is equal to around £500. However, on my credit card, they used a different rate, and it ended up costing me around £550.

How come banks can use a different currency rate than what is the 'official' rate? Can banks just use whatever exchange rate they like?

Yup.

They'll probably say in their T&C's that they'll use the daily rate, or whatever it was 2 weeks ago, whichever is more preferable for them. Alternitively, they may say that they make it up entirely.

I know Amex normally give me the daily rate on purchases when I was in the US, I imagine others may be different though...?

Samtheman1k · 4 Apr 2007 at 13:38

Wow, they're making around a 10% mark up!!!!!! :eek:

I guess they have to pay for all these bank charge refunds from somewhere :rolleyes:

growse · 4 Apr 2007 at 14:09

Samtheman1k said:
Wow, they're making around a 10% mark up!!!!!!

I guess they have to pay for all these bank charge refunds from somewhere

I feel your pain....

Werewolf · 4 Apr 2007 at 14:28

10% markup is quite large - most cards seem to take a couple of percent (my barclaycard for example has about 3% commission i think).

I believe it is however totally legal, banks do not have to use the current "bank" rate and can charge commission if it's noted in their T&C.

peter_hutson · 4 Apr 2007 at 15:30

Credit cards seem to have become increasing poor when used abroad. Many now also charge a 2.75% handling charge for transations outside the UK, including purchases, not just for cash advances. Then they spam you on the exchange rate. If you use your CC card abroad a lot, then the Nationwide and the Post Office are quite good, they don't charge this "handling charge", though they still get you for cash advances.

Jimmi · 4 Apr 2007 at 15:32

Nationwide FlexAccount *** :cool:

peter_hutson · 4 Apr 2007 at 15:38

Jimmi said:
Nationwide FlexAccount ***

Yep, looked at that account, was very impressed with it. Could not be arsed moving my current account though, so I just got their credit card.

Don't know why the Nationwide don't advertise these benefits more, very odd.