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Credit Cards – The European Credit Card Sting
By: Michael Challiner
Traditionally, using plastic abroad has always meant big charges. Things are a
lot better these days, but they have taken a downward slide again in some
European countries, as they get the option to add an extra charge to your bill.
In France, Italy and Spain, many of the bigger restaurateurs and retailers have
a system called DCC – dynamic currency conversion. It means they can convert
your payment straight into sterling for you, at the till. This may sound
tempting, but that conversion will add another 4% of the transaction onto your
bill. What is often happening is that customers are authorising the payment in
Euros, only for the retailer to put the payment through as sterling. UK
customers don't even realise that this is going on, until they get back and look
at the card statements.
According to the Visa's DCC guidelines, UK cardholders should be given the
option to pay in Euros or sterling. Most people don't get the option, they are
not aware that there is an option, and leave none the wiser. The retailer gets
the 4% by the way. Perhaps we could have put it down to the language barrier,
but seeing as the retailer actually pockets the extra, we're a bit suspicious of
their motives.
The advice is: request the payment to be put through in Euros. There are a few
card companies like Lombard Direct, Saga and Nationwide that don't actually
charge you any extra for converting the payment into sterling. The big
mainstream banks put a 2.75% charge on, but that's still less than 4%, so it's
worth paying in Euros.
If you look at the cost of changing your money into Euros in the UK, and
changing your cash and traveller's cheques in Europe – you'll find that paying
by credit or debit card while abroad is still cheaper because Visa and
MasterCard have better exchange rates. It's also reassuring to take money out as
you need it, rather than walking around with wads of cash, or having to queue to
change traveler's cheques.
In case you were still thinking of changing your money in a bureau de change,
don't fall for the ‘commission free' signs. They just charge you more on the
actual exchange rate, so you're still paying extra – how else do you think they
manage to stay in business!
Another tip: don't be tempted to withdraw cash using your credit card – either
abroad or in this country. You start paying interest immediately, and it's
always a very high rate of interest too. If you want to take cash out, only use
your debit card.
That brings us neatly onto our next subject, you need to be very vigilant when
dealing with your debit and credit cards. If someone manages to steal them, they
will no doubt get away with a lot of your hard earned cash before you cancel the
cards. What's the problem you may think, we're chip and pin now! But although
card fraud has reduced thanks to this new technology, there is more than one way
to skin a cat (so to speak). Here's how (true story):
Mr & Mrs B traveled to Prague for a week's holiday, and Mr B was unfortunately
pick pocketed and had his wallet stolen. Because the cards were all chip and
pin, they did not report the cards as stolen, thinking that the thieves wouldn't
be able to use the cards. However, they were not victims of chance criminals.
One of the group had watched the couple inputting a pin number at the cash
machine. Then another member got the wallet. Armed with a card and a pin number,
they cleaned out that account. Then they tried the same number on the other
cards – yes, you guessed it, all the cards had the same pin number. Mr and Mrs B
returned to find they had been relieved of thousands of pounds.
It's a common mistake – as many as 1 in 3 cardholders use the same pin details
for every card they own. Criminals know this, and many get away with a lot of
money because they have a whole wallet full of cards they can access. You don't
have to be in Europe, this can happen anywhere.
We have two vital pieces of advice:
Guard your number as you input it, someone could be watching, and later they
could try to grab your wallet or handbag.
Don't use the same pin number on more than one card. We know it can be hard to
remember all these pin numbers, but you can use a variety of tricks to remember
them – birth dates for example.
By being vigilant and keeping your wits about you, you can reduce your chances
of losing out to card fraud.
About the Author:
Michael Challiner has 15 years experience in financial services marketing at
senior level. Michael now works as the editor of Rhino Credit Cards. |
