Pros and Cons of Dynamic Currency Conversion

Dynamic currency conversion is a service that is offered by many credit card companies in today's market. With this feature, you can use your credit card abroad and the amount that you spend will automatically be transferred into the currency that you need. You will be billed in your own currency, while the merchant will receive the local currency. Here are some of the pros and cons of using dynamic currency conversion.

No Need to Get Cash

One of the biggest hassles of traveling abroad is that you will often have to deal with cash. When you get to the foreign country, you have to exchange your currency for the other currency. This means that you will have to guess as to how much money you will be spending while you are in the other country. If you underestimate how much money you need, you will have to go back to a currency exchange merchant. If you overestimate, you may have trouble changing the money back into the currency that you need when you are ready to leave. You will also have to deal with the risk that comes with carrying cash in a foreign country. With dynamic currency conversion, you can simply carry your credit card with you, and you will not have to worry about exchanging any money. This can save you time and money.

Summary of Charges

Another advantage of using dynamic currency conversion is that you will be able to keep track of your purchases in a foreign country more easily. When you are abroad, you will most likely have to make several purchases. By using your credit card for these purchases, you will get a detailed statement at the end of the month that shows exactly what you spent your money on. This will help you stay on top of your finances if you travel frequently.

Credit Card Fees

Even though this feature is very convenient, it will most likely end up costing you more money. When the credit card company offers this service, they will charge you for it accordingly. Sometimes, this will amount to another 2 or 3 percent of your purchase added onto the transaction. The credit card company will charge you something for the service of exchanging your money for you in order to be compensated. 

No Knowledge of Exchange Rates

When you use dynamic currency conversion, you are essentially at the mercy of your credit card company. You do not have any idea what the exchange rate is that they will be offering you. In some cases, you could potentially shop around with different merchants in order to find the best exchange rate available. With dynamic currency conversion, you simply use your credit card and you will not see what the exchange rate is until afterward.

Higher Costs

In addition to paying more money to the credit card company, you may find that the merchant adds to the price of the goods. The merchant will be charged a fee for allowing you to use your credit card and will most likely charge you more money.

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