Personal Finance

Changes in credit card forex conversion rate

  • Last Updated:
  • Aug 1st, 2009 11:09 pm
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[OP]
Deal Addict
Apr 1, 2004
1582 posts
29 upvotes

Changes in credit card forex conversion rate

Okay, so here's the backstory

- I recently went to Japan
- I had the option of using my credit card to pay or using debit card to withdraw cash to pay
- I have TD select service so there's no fee to use my debit card in Japan.
- All of my pre-trip research indicated that I should use my debit card

When I got there and actually used my CC and my debit card on the same day, it seemed like my CC actually gave a better rate. This was calculated by simply dividing the Canadian dollar charge on my bank account by the Yen withdrawn, and by dividing the Canadian dollar charge on my "credit card snapshot" by the Yen charged on the receipt. As a result, I charged a few grand on my credit card instead of using cash.

Here's the funky thing - I just got the statement for my credit card for that month, and it seems like the Canadian dollar amounts have changed from the "snapshot" view that I was originally given. I'm not 100% sure since I didn't write down the numbers, but according to my statement, the CC card gave a worse (~5%) rate than my debit card did, whereas I'm 95% sure that when I did the math initially, my CC card came out ahead.

Has anyone else every noticed this? Am I going crazy? Did I do my math in Japan wrong? I distinctly remember thinking to myself that - "woah! this is a great rate I'm getting!" and scoffing at all those online forums which told me to just use cash. And it's not like I was completely off... I remember my math then giving me about 86yen/$ on the CC, 84yen/$ on my debit card, but yet now all my cc transactions are about 80-82yen/$.
4 replies
Deal Addict
Jul 28, 2005
3237 posts
25 upvotes
Credit card use the rate on the date the item posted. This may be a couple of days after you have bought the item.
Deal Addict
Nov 18, 2008
3271 posts
69 upvotes
I wrote a post about this a few weeks back, it was while I was in Hong Kong.

http://www.redflagdeals.com/forums/show ... p?t=759593

It depends on what rate your financial institution decides to use. They can use Visa International, Mastercard, or their bank rate which may already have a certain percentage markup, in addition to the posted 2.5% fee. From my results above, I even found the markup to be less than 2.5% over the rate the Bank of Canada posts.

asdfvcx makes a good point, that CC transactions are converted on the day they are posted. With the way the currency markets have been in the last few weeks, I'm not too surprised you saw a huge difference, while ATM withdrawals are converted in real-time.

And for example, I'm in the US right now and getting a great rate for USD cash withdrawals. The official interbank rate is 1.07761 CAD per USD, while with my Canadian HSBC card the rate I got was 1.0915 CAD per USD, a 1.3% markup.
[OP]
Deal Addict
Apr 1, 2004
1582 posts
29 upvotes
asdfvcx wrote:
Aug 1st, 2009 10:48 pm
Credit card use the rate on the date the item posted. This may be a couple of days after you have bought the item.
So then the amount that's shown initially before the posting date is just some random, made up amount? And by shown initially, I mean the amount that shows up on most CC website's "recent activity" or "snapshot" view as opposed to statement view.

Arg, this whole thing makes me so annoyed. I spent so much effort to make sure I maximized my exchange rate...
[OP]
Deal Addict
Apr 1, 2004
1582 posts
29 upvotes
tng11 wrote:
Aug 1st, 2009 10:59 pm
I wrote a post about this a few weeks back, it was while I was in Hong Kong.

http://www.redflagdeals.com/forums/show ... p?t=759593

It depends on what rate your financial institution decides to use. They can use Visa International, Mastercard, or their bank rate which may already have a certain percentage markup, in addition to the posted 2.5% fee. From my results above, I even found the markup to be less than 2.5% over the rate the Bank of Canada posts.

asdfvcx makes a good point, that CC transactions are converted on the day they are posted. With the way the currency markets have been in the last few weeks, I'm not too surprised you saw a huge difference, while ATM withdrawals are converted in real-time.

And for example, I'm in the US right now and getting a great rate for USD cash withdrawals. The official interbank rate is 1.07761 CAD per USD, while with my Canadian HSBC card the rate I got was 1.0915 CAD per USD, a 1.3% markup.
Very nice post, I appreciate that. I do see what you mean about the posting date making a difference... I guess I'm just confused what the initial number was that they used before it got posted but after it actually showed up on my account together with a Canadian equivalent.

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