I’m used to being charged at least 2.5% extra by MasterCard when I buy something in a currency other than Canadian dollars. However, I recently had my first experience with a retailer doing the conversion for me at a higher price than MasterCard charges.
I rented a car in Europe and the total cost for 4 days came to a hefty 425.70 Euros. According to the Bank of Canada, converting this to Canadian dollars at a fair rate on the day I paid would give C$560.31.
Based on credit card charges on the same day, MasterCard would have charged me $575.90 or 2.8% more. This differs slightly from their advertised 2.5% fee possibly by random variation and possibly due to choosing a favourable rate during the day.
However, MasterCard never got the chance to make an extra C$15.59 from me because Hertz did a conversion to Canadian dollars. They charged me C$586.37 or 4.7% more than a fair exchange. Hertz made an extra C$26.06 from me, which is C$10.47 more than MasterCard would have charged me.
The most amusing part of all this is the following note printed on my receipt:
“I have been offered a choice of currency and chosen to pay my rental charges in the currency of my card.”
This isn’t true. No doubt there was something buried in the papers I had to hurriedly sign when I picked up the car, but I would never have chosen to be charged in Canadian dollars if I understood the choice I was making.
So, Hertz, congratulations on extracting an extra ten bucks from me in addition to MasterCard’s money. Maybe you could have converted the charge to U.S. dollars so that MasterCard could get a piece of me as well.
The part of all this that irks me the most is that there is virtually no cost to currency conversion when there is no physical cash involved. The extra amounts are almost completely extra profit.
Hi,
ReplyDeleteBudget did this to me as well when I rented a car last month! Their conversion fee was 5%, and I was not told the rate until I got home and was thoroughly reading the "fine" print (I had only glanced over while signing).
Enjoy your blog!
Lloyd
@FineWisdom: I was fairly certain that Hetrz wasn't the only ones. Thanks for passing along news that Budget pulls this trick as well. Maybe I should charge a 10% "not leaving any garbage in the car" fee.
DeleteI was charged currency conversion fees and differences in rates while withdrawing USD from a USD VISA while in Mexico. Charged twice: first from account currency to Pecos and then from Pecos to USD.
ReplyDeleteAl Capone & Co can take a break when banks are at work.
On a positive side: I strive to call my Canadian bank prior to trips to ask which banks in my destination country will not charge fees for cash withdrawals; does not hurt to know.
What you need is a credit card that has no foreign currency transaction charges. I'm aware of 2 that are available from Chase Canada. The trade off is you wouldn't get the add insurace you would with higher end credit cards.
ReplyDeleteThis apparently has been around for a long time, I remember being asked if I wanted to settle a US car rental in Canadian dollars at least 5 years ago. At least they asked verbally and didn't implicitly buried in the fine print. It was the guy receiving the return with the mobile credit card terminal that made the currency conversion offer. Being a good consumer, I asked why I would want to do that. The answer was "if I wanted to" and "it could be more convenient" for me. He didn't seem to know what an exchange rate was (or he was sorry he even asked cars were lining up behind us), so I declined the offer.
ReplyDeleteI forget what company that was, but my most recent US car rentals have been from Avis and they haven't offered to do or implicitly done currency conversions for me.
@AnatoliN: A round-trip charge is a nice touch. I guess they never want to see you again.
ReplyDelete@Ken: I'll look into the credit card you mention. However, I don't think it would have helped me in this case since it was Hertz that did the currency exchange.
@Greg: It's possible that nothing was in my fine print about this and that it was the guy with the mobile credit card terminal who did the conversion. But that just means that Hertz pays this guy an extra commission (or has quotas) for extracting extra money from me. No doubt the mobile credit card terminal guy gets more people accepting the conversion when he doesn't bother asking customers if they want it.
One of those Chase cards is probably the amazon.ca chase visa, which is one of the favourites on redflagdeals because of its lack of currency conversion.
ReplyDeletePaypal tries to do this too me occasionally too. I don't know what their rate is, and it doesn't always pop up, but when it does it's the default option and could be easily accepted without realizing.
Thanks for the heads up! We have friends traveling to Italy this summer. I'll warn them to keep an eye out for this clause. It sounds like a good deal for the rental agencies but pretty nasty for everyone else.
ReplyDeleteI've encountered several retailers who do this type of thing when shopping in the US. It's been well over a year, so I forget exactly how it is presented, but it was always quite clear and the card terminal presented both options and allowed me to choose. By seeing both prices, I was usually able to do some quick mental math to determine whether I was better off paying 2.5% to my credit card or taking their currency conversion option.
ReplyDeleteAs it's been awhile, I don't remember the exact rates. But as I recall the rates were usually fairly close to 2.5%. Usually a bit higher, but occasionally a bit lower. I'm quite certain I never encountered any in the 5% range.
It sounds like the rental car companies are real pioneers at turning this into scam. Or maybe this is a trend and retail stores are also increasing rates and/or making the conversion automatic. I'll have to keep an eye out in the future.