When I pay in a foreign currency by credit card, I trust that the bank will charge a fair conversion rate. But, I never spend the time to check on the conversion rate that they use. Someone told me that the conversion rate is rather high for the consumer. Do you have any information about this? Please share it.
It is true. The exchange rate is better than the money changer. I normally use credit card to pay for goods and services when I am oversea.
ReplyDeleteYup, that's true - I notice that I end up paying a lot more money when I use my credit card while I'm overseas.
ReplyDeleteThe same goes for withdrawing money from overseas ATMs - you have to pay a service fee for withdrawing the money.
What I do when I'm overseas is to withdraw money from my Citibank using my Citibank ATM card. If I'm not wrong, it's the only bank that doesn't charge a service fee.
The conversion rate is slightly lower than what you'd get if you changed the money into cash in Singapore, but it's significantly better than the other two options I mentioned above.
i think that person is right. I have personal experiences and felt the spread too wide. now, i make it a point to convert the cash in SG and only use credit cards when I overspend.
ReplyDeletethe bank should be using the actual day conversion rate when u make ur purchase. the problem is the bank will charge an extra 1% or more on top of the conversion rate for the service......
ReplyDeleteREX comments as follows,
ReplyDeleteMany times i charge foreign currency to credit account, in fact for the last 26 years in the course of my work.
I never had problem with the exchange rates they use. I have randomly made checks on it before, no problem at all, the rates are reasonable.
REX
When paying in foreign currency through credit cards, the exchange rates used by the bank is never shown. I never know what rate they are using, and I never seem to get a good exchange rate.
ReplyDeletePayPal offers the ability to charge you in SGD even if you are paying in USD, i.e., they perform the conversion and tell you the converted amount in SGD upfront rather than leaving it to the banks. I find this better because I know how much I will be charged upfront.
you never know the exchange rates used by the banks till you get your statements. It is like using a service without knowing the charges till it is over.
ReplyDeleteMy solution for this is to use the credit card issued in the country that I am visiting. For example, I use my HSBC Hong Kong credit card when I visit Hong Kong and my U.K. credit card issued by Midlands Bank when I am in UK. This way, I do not have to bother with the currency exchange rates used by the banks.
Credit cards charge a spread (1% or more) on top of their daily board rate for FX transactions.
ReplyDeleteIts more expensive than the actual FX spot rates and quite a number of times higher than the rates the money changer in Singapore gives.
However, SG is the only country, where money changers are almost everywhere and they do give good rates. When I was in continental europe, their spreads were horrible. i.e 1 eur = 127/157jpy
Even in AU as well.
Advise is, try bringing sufficient cash. if not, sign.
rex comments as follows,
ReplyDeletere. STG post. Sure or not? You alleged: Credit cards charge "a number of times higher than the rates money changer gives".
This is an exaggeration surely.
You mean if the us$ rate is 1.4, the credit card co. charges 2.8 or 4.2 according to your statement? From my experience the rate will be at most 1.42 in this example.
rex
Hi, does any one know how to avoid the additional 2.5 % charge on the USD to SGD conversion when I would like to withdraw USD paypal fund into local bank?
ReplyDeletePaypal has a poor currency conversion rate. That's why I ask. If possible, i would rather withdraw the fund in USD directly.