February 7, 2006

Many holidaymakers are unaware of the charges they incur when using a credit card to purchase goods while on vacation and many end up paying over the odds.

The Nationwide Building Society has launched a guide for its credit card holders to explain the perils of Dynamic Currency Conversion (DCC). It was estimated that DCC cost holidaymakers £5m in the month of July last year alone.

DCC is used when a retailer converts the purchase price from local currency into sterling at the time of the transaction. There is a conversion fee for this service.

If a payment is made in Euros the credit card provider handles the currency conversion.

When using DCC a retailer is meant to ask for the customers consent. Many times this is not done and is carried out automatically.

The Nationwide Building Society is urging its credit card holders to pay in local currency, which would enable the card holder to avoid costly exchange and commission rates.

The Nationwide credit card is one of the few on offer that does not charge a foreign currency usage fee, normally 2.75% of the purchase price.

Nationwide says that the practise of using DCC automatically happens more often in Spain, Italy and France and have included local language phrases in its credit card guide.