Which Currency With Credit Card Purchase?

[OliverKlozerof]

In the last year or so, on those relatively rare occasions when I use a credit card to buy something (like a pair of shoes in a mall), the cashier asks if I want to pay in Thai baht or US dollars. To which I reply, "how should I know?" Then there's one of those useless discussions. Finally he or she just picks one.

Anyone know which one I should choose? (And why?)

FYI, I have a Mastercard issued through Bank of America in the USA in Seattle at my address there. I pay the bill when due online from my B of A checking account. I'm in Thailand about 11 months out of the year. Thx.

[Upnotover]

Thai Baht always.  Have a look at DCC (Dynamic Currency Conversion) and all will be clear.

[OliverKlozerof]

27 minutes ago, Upnotover said:

Thai Baht always.  Have a look at DCC (Dynamic Currency Conversion) and all will be clear.

I'll look it up when I get a chance. I wonder though, if that's the obvious choice, why do they even ask?

[Upnotover]

Just now, OliverKlozerof said:

I'll look it up when I get a chance. I wonder though, if that's the obvious choice, why do they even ask?

Because they make money if you choose your home currency.  But they are obliged to ask first as it is a complete rip off.

[DineshR]

Yes... Thai Baht always. At the time you make your purchase, the MasterCard or Visa exchange rate will always be lower than the rate your own bank will give you when they convert your Thai baht transaction into dollars. What this means is that if you select dollars at the point of purchase, you will end up paying more. The cashier is given the option to select which is why they ask since they don't know.


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[OliverKlozerof]

7 minutes ago, DineshR said:

Yes... Thai Baht always. At the time you make your purchase, the MasterCard or Visa exchange rate will always be lower than the rate your own bank will give you when they convert your Thai baht transaction into dollars. What this means is that if you select dollars at the point of purchase, you will end up paying more. The cashier is given the option to select which is why they ask since they don't know.

Two days ago I asked the clerk, in Thai, "What's the difference?" She said there was no difference. Of course, she didn't say, "If you choose US dollars, then you end up paying more and we get more of your money." But apparently that *is* the difference. So, she either knowingly lied or feigned ignorance or *was* ignorant and just said the first thing that came to mind. What a world.

[Upnotover]

3 minutes ago, OliverKlozerof said:

Two days ago I asked the clerk, in Thai, "What's the difference?" She said there was no difference. Of course, she didn't say, "If you choose US dollars, then you end up paying more and we get more of your money." But apparently that *is* the difference. So, she either knowingly lied or feigned ignorance or *was* ignorant and just said the first thing that came to mind. What a world.

She probably only knows that she is supposed to encourage you to use your home currency, likely has no real idea why.  They do it all over the world not only here.

[onthesoi]

If you choose baht you get the mastercard rate which is usually a touch better than the rate shown by google.

 

If you choose your home currency you will get whatever rate they like.

Edited May 14, 2017 by onthesoi

[SiamBeast]

ALWAYS pay in the local currency, never in your home currency. The reason is just tot make more money since they use their own conversation rates. I'll let you make your research, but I'll ask you something: Do you think that they'll give you a special low rate because of that?

Hint: They don't.

[Swiss1960]

8 hours ago, DineshR said:

Yes... Thai Baht always. At the time you make your purchase, the MasterCard or Visa exchange rate will always be lower than the rate your own bank will give you when they convert your Thai baht transaction into dollars. What this means is that if you select dollars at the point of purchase, you will end up paying more. The cashier is given the option to select which is why they ask since they don't know.


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8 hours ago, onthesoi said:

If you choose baht you get the mastercard rate which is usually a touch better than the rate shown by google.

 

If you choose your home currency you will get whatever rate they like.

 

First, it is NOT your home bank that would set the exchange rate, if you decide to pay in your credit card's currency (here: US$). It would be the Merchant's (seller's) bank here in Thailand that would set the exchange rate - which of course is higher than the rate that VISA / MasterCardwould set.

 

Second, it is NOT always the exchange rate from VISA / MasterCard that will be used, if you pay in your credit card's currency. Credit card issuing banks have the right to set their own exchange rates, independant from VISA / MasterCard and they could decide to add an exchange rate adjustment of i.e. 1.25% to the exchange rate of VISA / MasterCard. Whether they do that or not, should be found in the T&C of your credit card. Some banks - including the one I worked for - even have different exchange rates based on the product they sell, i.e. gold cards get better rates than standard cards.

 

But truth is to always choose to pay in the local currency. DCC (Dynamic currency conversion) rates tend to be in the 3% range. 

[nuananddon]

I also have a credit card from the USA, Visa with Capital One. I choose the US dollars and here's why, Capital One does not charge a foreign exchange fee and the other reason is they always give a better exchange rate then you'll get from any bank. I always check my receipt ,dollars off the statement divided into the baht amount and 100% of the time it's a better exchange rate then any of the banks are offering. If this is wrong, then somebody explain to me why

[Langsuan Man]

1 hour ago, nuananddon said:

I also have a credit card from the USA, Visa with Capital One. I choose the US dollars and here's why, Capital One does not charge a foreign exchange fee and the other reason is they always give a better exchange rate then you'll get from any bank. I always check my receipt ,dollars off the statement divided into the baht amount and 100% of the time it's a better exchange rate then any of the banks are offering. If this is wrong, then somebody explain to me why

 

You need to do a search for the term onshore versus offshore.  Your concern about the no foreign exchange fee is clouding your judgement about the exchange rate you are given by choosing US dollars 

 

By choosing US dollars for your charges from Cap One (and yes I have the same card) you pay more when you the charge appears on your bill

 

Here is an example using the voided cc slip for 50,000 THB at a hospital in Pattaya and the Cap One monthly statement, that was rung up correctly after I insisted on Thai Baht

 

 

 

Edited May 15, 2017 by Langsuan Man

[onthesoi]

1 hour ago, Swiss1960 said:

 

 

First, it is NOT your home bank that would set the exchange rate, if you decide to pay in your credit card's currency (here: US$). It would be the Merchant's (seller's) bank here in Thailand that would set the exchange rate - which of course is higher than the rate that VISA / MasterCardwould set.

 

Second, it is NOT always the exchange rate from VISA / MasterCard that will be used, if you pay in your credit card's currency. Credit card issuing banks have the right to set their own exchange rates, independant from VISA / MasterCard and they could decide to add an exchange rate adjustment of i.e. 1.25% to the exchange rate of VISA / MasterCard. Whether they do that or not, should be found in the T&C of your credit card. Some banks - including the one I worked for - even have different exchange rates based on the product they sell, i.e. gold cards get better rates than standard cards.

 

But truth is to always choose to pay in the local currency. DCC (Dynamic currency conversion) rates tend to be in the 3% range. 

 

First, thats exactly the same as what I said but using different words.

 

Second, If you use mastercard and pay in local currency then you always get the mastercard rate, your card provider may or may not add additional charges on top of that, the op did'nt provide enough detail to say either way, my mc doesnt have any additional provider charges beyond the mc rate.

 

The truth is your concluding advice to pay in baht is exactly the same as mine so no need to quote me, you could have made a seperate post pointing out the potential for provider charges on top of the mc rate and asked the op to check the small print from his card provider on using his cc abroad.

Edited May 15, 2017 by onthesoi

[animalmagic]

The company that set up the process to spend in your home currency makes billions from the people who choose to do so.  The idea was created to placate people who are not too comfortable with mental arithmetic and feel they are being ripped off by exchange rates in currencies they don't understand.  So, rather than let them feel they are being ripped off by people in a foreign country, they get ripped off by their own people instead.

[onthesoi]

1 hour ago, nuananddon said:

I also have a credit card from the USA, Visa with Capital One. I choose the US dollars and here's why, Capital One does not charge a foreign exchange fee and the other reason is they always give a better exchange rate then you'll get from any bank. I always check my receipt ,dollars off the statement divided into the baht amount and 100% of the time it's a better exchange rate then any of the banks are offering. If this is wrong, then somebody explain to me why

Put simply, it's wrong because if you pay in dollars it's not Capital One who processes the exchange rate it's the person who you handed your card to...and they can set that rate to anything they like which will never be in your favour.

[Swiss1960]

5 minutes ago, animalmagic said:

The company that set up the process to spend in your home currency makes billions from the people who choose to do so.  The idea was created to placate people who are not too comfortable with mental arithmetic and feel they are being ripped off by exchange rates in currencies they don't understand.  So, rather than let them feel they are being ripped off by people in a foreign country, they get ripped off by their own people instead.

 

So completely wrong.... the exchange rate for DCC (dynamic currency conversion into the buyers home currency) is NOT set "by their own people", but by the merchants bank in the foreign country... 

 

And second, "the company who set up the process" is VISA respective MasterCard who allow the merchant banks to offer their own exchange rates for people with credit cards that have a different settlement currency. VISA and MasterCard do NOT make money from the use of DCC, it is the merchant banks who make that money.

[Swiss1960]

15 minutes ago, onthesoi said:

 

First, thats exactly the same as what I said but using different words.

 

Second, If you use mastercard you always get the mastercard rate, your card provider may or may not add additional charges on top of that, the op did'nt provide enough detail to say either way, my mc doesnt have any additional provider charges beyond the mc rate.

 

The truth is your concluding advice to pay in baht is exactly the same as mine so no need to quote me, you could have made a seperate post pointing out the potential for provider charges on top of the mc rate and asked the op to check the small print from his card provider on using his cc abroad.

 

Naughty me to have quoted you.. now I think I should not do that never again... or not...

 

But... you should stop posting wrong information like what I put in bold, italic and underlined... you do NOT always get the MasterCard rate. I worked in the credit card industry in Switzerland for 20 years and I do KNOW that this is not true for several banks all around Europe and clearly in line with the regualtions of MC. 

 

[nuananddon]

Thanks to all you gentlemen who have enlightened me on the use of a charge card in Thailand. From now on I will use the local currency on my charges. Never to old to learn something new. Thanks again.

[simoh1490]

10 hours ago, DineshR said:

Yes... Thai Baht always. At the time you make your purchase, the MasterCard or Visa exchange rate will always be lower than the rate your own bank will give you when they convert your Thai baht transaction into dollars. What this means is that if you select dollars at the point of purchase, you will end up paying more. The cashier is given the option to select which is why they ask since they don't know.


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Not always lower, the DCCR is the average of the banks exchange rates hence 50% will gain, 50% will loose.

 

Plus, some credit card issuers levy a foreign currency transaction charge so you'll need to know if yours does or doesn't.

Edited May 15, 2017 by simoh1490

[thurien]

11 minutes ago, nuananddon said:

Thanks to all you gentlemen who have enlightened me on the use of a charge card in Thailand. From now on I will use the local currency on my charges. Never to old to learn something new. Thanks again.

and don't forget: the Thai cashier more than ever so often "forgets" to ask you which debit currency you prefer - so always be pro-active and tell them in advance. On the other hand: Once I forget and they forget to explore my favourite currency  let them re-wind the full booking and start all over again. The friendly customer faces behind you will be a lesson for the cashier

[DineshR]

W.R.T. simoh1490 ... you are right ... different banks charge different rates and some have an additional foreign transaction fee (Bank of America has the worst exchange rate plus they add a foreign transaction fee which is why I never use my BOA card overseas). But there are some cards like Chase that don't have foreign transaction fees and offer exchange rates close to market rates ...

 

w.r.t. Swiss1960 - I am not an expert on card transactions but I can safely say that no matter where I have used my Chase card in Thailand or Malaysia, I have ALWAYS gotten the best exchange rate possible (almost close to current market rate) when buying in the local currency - so I am not convinced that it is the merchant's bank that is setting the rate as I find it highly unlikely that with all the different merchants I have used (and the corresponding different banks involved) that all these banks would give me the best rate. I am more inclined to believe that it is an intermediary stateside between VISA/MC and my bank that is setting the rate since it appears to be consistent all the time regardless of merchant/country.

[humqdpf]

11 hours ago, Upnotover said:

Thai Baht always.  Have a look at DCC (Dynamic Currency Conversion) and all will be clear.

I used to agree that it was always better to have the amount charged in the local currency and then to have the conversion done by your home bank. This wasn until I found that Barclays (and not just them, ALL banks in the UK do this) were exchanging so far from the mid-point of the exchange rate and it was costing me a lot of money. Even when I went to transfer a sizeable sum and tried to negotiate with them, they refused to - I use a different transfer service now rather than the banks that gives me better rates (mid rate at the time of ordering) and lower charges.

[Jonmarleesco]

THB. The FX rates used by the outlet, whether retail, service, medications, et al, and for which they will show you the figures, are inferior to those you'll obtain from the card issuer.

[CGW]

44 minutes ago, nuananddon said:

Thanks to all you gentlemen who have enlightened me on the use of a charge card in Thailand. From now on I will use the local currency on my charges. Never to old to learn something new. Thanks again.

This isn't peculiar to just Thailand, dependent the retailer and your card happens many places Singapore often does!

Demonizing the poor sales clerk? nothing to do with them!

[Kabula]

TBB, Thai Baht always.  Tell then before they start the check out process.

 

 

[OliverKlozerof]

3 hours ago, Langsuan Man said:

 

You need to do a search for the term onshore versus offshore.  Your concern about the no foreign exchange fee is clouding your judgement about the exchange rate you are given by choosing US dollars 

 

By choosing US dollars for your charges from Cap One (and yes I have the same card) you pay more when you the charge appears on your bill

 

Here is an example using the voided cc slip for 50,000 THB at a hospital in Pattaya and the Cap One monthly statement, that was rung up correctly after I insisted on Thai Baht

 

 

 

I'm mathematically challenged, but is this correct?: 1352 divided by 170 = 7.95.... That means in this case you saved almost 8% by paying in baht? If so, that's definitely significant. I suppose the amount you save varies depending on one's particular CC. But especially on a large amount like this, it makes a big difference. (Not so much difference on a pair of shoes, as in my case. But still worth doing, of course.)

[Langsuan Man]

2 minutes ago, OliverKlozerof said:

I'm mathematically challenged, but is this correct?.......I suppose the amount you save varies depending on one's particular CC

 

The  CC slip shows the total in Thai Baht as being 50,000 THB @ $1,522.87 and the Credit card statement shows 50,000  THB @ $1,352.02, all I care about is that I save $170 by insisting on charge being in Thai Baht.  And yes,  it is a significant amount and is the reason the banksters want the money in their pocket instead of yours

 

You should save the same amount (%)  regardless of the foreign credit card used, since they all pretty much use the same exchange rate, (Visa or MC)  they just charge more if you do it in your home currency as shown  

 

[Sophon]

6 hours ago, Langsuan Man said:

 

You need to do a search for the term onshore versus offshore.  Your concern about the no foreign exchange fee is clouding your judgement about the exchange rate you are given by choosing US dollars 

 

By choosing US dollars for your charges from Cap One (and yes I have the same card) you pay more when you the charge appears on your bill

 

Here is an example using the voided cc slip for 50,000 THB at a hospital in Pattaya and the Cap One monthly statement, that was rung up correctly after I insisted on Thai Baht

 

 

 

I don't know why, but something isn't adding up with your numbers. Your account statement shows that you were charged 1,352.02 USD at a USD/THB exchange rate of 34.949926776, meaning that the original amount charged to your card was THB 47,252. The credit card slip on the other hand shows a nice round number of THB 50,000, which sounds like a rather strange amount for a hospital bill.

 

Assuming that the correct bill amount was THB 47,252, and that the hospital would somehow have credited you for the surplus amount of THB 2,748 charged to your card, then the corresponding USD amount for your bill using DCC would have come out at USD 1,439.17. So you would have been overcharged by USD 87.15 or 6.45% by accepting the use of DCC. You would also have received a poor exchange rate for the THB 2,748 that they would presumably have given you in cash when you pointed out, that the amount charged to your card was higher than the bill.

 

So only about half of the USD 170.85 from your example is down to DCC, the rest is because they charged your card different amounts when using DCC and when subsequently charging you in THB.

 

Sophon

[PMZ]

8 hours ago, nuananddon said:

I also have a credit card from the USA, Visa with Capital One. I choose the US dollars and here's why, Capital One does not charge a foreign exchange fee and the other reason is they always give a better exchange rate then you'll get from any bank. I always check my receipt ,dollars off the statement divided into the baht amount and 100% of the time it's a better exchange rate then any of the banks are offering. If this is wrong, then somebody explain to me why

If you are in Thailand and you select USD as the payment currency, it is not your bank or credit card co that offers that facility, the merchant (seller) will have an agreement with a DCC company and there will be a % cost (between 3 & 5% usually).

Your bank / CC Co is simply the recipient of a debit in USD, that is why you see no additional charges on your statement.

 

Advice to the Op: use local currency.

 

[Langsuan Man]

36 minutes ago, Sophon said:

I don't know why, but something isn't adding up with your numbers

The top number is what 50,000 THB was when the charge was rung up correctly in Thai Baht and is from  my credit card statement                 ( $1,352.02)

 

The problem you are having is you didn't notice that the VOID charge slip is the amount in dollars that I would have been charged                     ( $ 1,522.87) if I had not forced them to void it.  Same day, same amount of Thai Baht,  but the difference is $170.85, which is what I saved by  forcing the transaction for 50,000 THB to be done in Thai Baht, not in US dollars