Overseas Charges May Not Be What They Seem : * Credit cards: Travelers should pay close attention to their monthly statements after charging merchandise abroad. Exchange rates can alter the money owed.

Buying merchandise by credit card overseas can end up costing consumers more--or less--than they originally bargained for, after the purchases are converted from foreign currency into U.S. dollars by credit card companies.

On the same subject of credit card purchases in foreign countries, consumers often fail to carefully inspect their monthly billing statements to determine if there were any errors made, inadvertent or otherwise, before sending in payments. And errors are not uncommon when currency conversions are involved. For example, a $12 purchase can easily become $42, $72, $92 or even $124. Typically, only small sums of money are involved, sometimes not enough to immediately draw attention to the bill. Always check the purchase price before you tuck away your receipt, and then compare the receipt to the charge on the monthly credit card statement.

A friend of mine recently bought a silk tie in Bangkok using a credit card. The price was 215 bahts in Thai currency. But when he received his credit card statement, the purchase was listed as 295 bahts. Since my friend had prudently saved both his credit card carbon and receipt, he was able to spot and quickly document the error. When he disputed this charge with the credit card company, the company contacted the merchant’s bank in Bangkok, which in turn checked it out with the merchant. After it was determined that an inadvertent error had been made, the amount on my friend’s statement was changed to 215 bahts, and the conversion of bahts into dollars was recalculated.

But back to the original point. Here’s an important fact to understand: Currency conversions are made by the credit card company at the time of processing , not at the time of purchase by the consumer. Thus, travelers may not be getting the rate of exchange that they think they are. Depending on what direction the dollar is going, that could amount to money saved--or money lost--for consumers.

“Travelers tend to think the conversion rate will be the same one as the rate of exchange when they made their purchase,” said Bob Moloney, senior vice president and controller for MasterCard in New York. “But the conversion rate can be different when their charge is processed. They may get a better or worse rate, depending on the value of the dollar against that foreign currency on the day of processing.”

It’s also possible that the establishment where you made the charge may keep your bill for a short time if it seems that the dollar could go down in value.

Another variable in the credit card process is the particular rate of exchange used to calculate the purchase in U.S. dollars. It could be the official rate of exchange imposed by the foreign government, an interbank wholesale rate that banks use among themselves for transactions, or the retail rate that travelers get when exchanging money at any retail outlet. The particular rate of exchange used is not listed on monthly credit card statements.

American Express, for example, uses the interbank wholesale rate in most countries. “We only use the official rate of exchange in a few countries, such as Brazil or Argentina, where the government controls the rate,” said Jay Stevelman, vice president-treasurer of American Express International. “The wholesale rate, which banks use between themselves, is the best rate. The tourist or retail rate is less favorable than an interbank or official rate of exchange.”

Your monthly statements don’t necessarily include the foreign currency conversion rate used. “We encourage member banks to cite this information as a customer service, and more and more banks are doing it now,” said MasterCard’s Moloney.

Here are a few tips to remember on the subject of using credit cards overseas:

--If the dollar is not doing too well against the local currency, use cash (including traveler’s checks). Conversely, if the dollar is going up, charge to your heart’s content.

--Before using your credit card, ask if there is any discount or incentive for paying by cash or traveler’s check.

--If possible, travel only with credit cards that you have a good idea you’ll be using, and make sure in advance that your card can be used where you’re going.

--Keep a copy of your credit card numbers with you, and leave another copy at home.

--Report loss of your cards promptly. If you suspect theft was involved, contact both the local police and the U.S. consular office. Leave a copy of your itinerary, as well as your home address, at both places. And ask for some documentation of the mishap from police for your own records.