# Euros or dollars? The wrong choice will cost you

Question: On trips to Italy and Spain last year, a hotel in each country asked me whether I would like my bill charged in dollars or euros. I had not been to Europe for a while, and I had never been asked this. I didn't know what to say, so I went one way at one hotel and the other way at the other. Does it matter which currency I choose? Do I have to know what the rate of exchange is for that day to give an intelligent answer? I have a credit card with no foreign transaction fees. Would it matter if I did not?

Julie Bisceglia

Manhattan Beach

Answer: Bisceglia — and millions of others, including me and probably you too — has stumbled onto one of the newer ways to part tourists from their money. And guess what? It's mostly legal.

The practice is called "dynamic currency conversion," and it is not your friend. It works this way: You go to pay your dinner check in, say, France. The merchant asks whether you would like to pay in euros or dollars.

"How thoughtful," you think, "Someone is trying to help me overcome my conversion aversion and tell me in U.S. dollars how much I owe."

The merchant isn't helping you overcome your math problem; he's helping himself to a few extra of your dollars. He's banking on the fact that you don't know what the exchange rate is. If you did, you would see that the dollar exchange rate you're getting probably is lousy. Guess who gets the difference between the real rate and what you're paying? Hint: Not you. And, by the way, the merchant is supposed to ask you whether you want this conversion done; sometimes he doesn't, which is contrary to rules that are almost impossible to enforce because there are so many points of sale.

The answer to Bisceglia's first question — does it matter which currency I choose? — is yes, it does. The currency you should choose when you're in a foreign country generally is the currency of the country you're visiting, whether it's euros, pounds, pesos or whatever.

The answer to Bisceglia's second question — do I have to know what the rate of exchange is for that day to give an intelligent answer? — is no, you don't have to know the rate to give an intelligent answer. All you must know is that if you choose U.S. dollars, you're probably going to get hosed.

How can merchants justify this practice? Kevin Yuann, director of credit cards for NerdWallet, a personal finance website, explains that expressing a total in U.S. dollars is painted as a "convenience" for the traveler.

He's not defending the practice, mind you; in fact, he has run afoul of it.

"I was paying for a restaurant bill — this was in Italy — and because I'm aware of dynamic currency conversion, I realized there was a 5% fee for using that [total in U.S. dollars]," he said. He told the waiter he had not authorized a bill in U.S. dollars. The waiter, he said, stared at him blankly. Finally, the manager got involved, and the matter was resolved.

To Bisceglia's third question — would it have mattered if I was using a credit card that doesn't charge a foreign transaction fee? — the answer is not really. The dynamic currency conversion fee is separate from a foreign transaction fee, which can add as much as 3% to your bills.

As readers often point out when we're talking about fees, what's the big deal over a few dollars?

The big deal, says Odysseas Papadimitriou, chief executive of personal finance websites CardHub and WalletHub, is that the fees add up. If you spend \$1,500 abroad, and you're not paying attention to the dynamic currency conversion and foreign transaction fees, you could be out as much as \$150 on that \$1,500 you've spent. You might as well light that money on fire.

Now that you know you can say no to dynamic currency conversion, what about the blasted foreign transaction fees? About 90% of credit cards charge them, Papadimitriou says; carry one that doesn't. You can find a list of credit cards from CardHub that can be filtered to distinguish those with no foreign transaction fees. NerdWallet also has a list of cards.

What can you do to protect yourself? The experts offer these suggestions:

— Familiarize yourself with the exchange rate and carry a calculator (there's one on your smartphone, or you can use an exchange-rate app) to calculate what you're being charged. If the amount is negligible, you may want to choose dollars for the convenience, which is how it's positioned in the first place.

— Pay close attention to your bill at the point of sale. If dynamic currency conversion is in play, the merchant is supposed to ask you whether you want to pay in the local currency or in dollars, but that doesn't always happen. If you get a dinner check in dollars, for instance, ask that it be changed.

— Keep your receipts. If you are paying in the local currency and a charge shows up on your monthly credit card bill that suggests you've been charged in dollars, dispute the charge with your credit card company.

The easiest way to avoid the conversion, of course, is to pay cash, although that comes with its own concerns about exchange rates, ATM fees and, of course, getting pickpocketed.

There is, then, no perfect solution to money abroad, except to be aware of others who will part you from it.

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