Scams involving currency conversion used by car rental companies ...

When you buy services using a credit card in your own country, there are transaction charges but, in most cases, they are only paid by the merchants who sell you the goods or services (although they will increase their retail prices to cover the charges, of course). But the moment you use the credit card to buy goods or services in a different currency, you will suddenly find extra charges appearing. The first is simply for handling a transaction in a foreign currency. The second is the currency exchange rate commission.

If the bank is being honest, it will charge the prevailing national exchange rate. This will mean the transaction has a neutral cost. But if the bank is less than honest, it will use a lower exchange rate. This means it costs you more to buy the goods and services than if you went to a money changer and used cash. Worse, you are being charged for being given the poor value in the transaction. For these purposes, it can be worth acquiring a ?foreign? credit card if you?re a regular traveler. You will avoid foreign currency charges this way, although you will need to avoid a further problem.

Some international car rental companies operate their own currency conversion. So let?s say you have a US$ credit card and you go to a branch of a US rental company in Paris. Some branches do their own currency conversions and bill your credit card in US dollars. That sounds good to you because there are no foreign currency conversion charges to pay. But suppose that conversion uses an exchange rate that?s significantly worse than international rate. You might be paying 10 or 15% more than locals would pay, i.e. rather more than your honest bank would charge you.

Some local car rental companies offer conversion through third party banks. This sounds good. You?re being billed in your own currency so no administrative fees. But what often happens is that the exchange rate is very poor and the difference between the rate you pay and the rate the converter uses is split with the rental company. To reduce the risk of being scammed you should refuse the option of local conversion if you speak the local language, or just prepay.

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Source: http://www.americansociety-rio.org/675-scams-involving-currency-conversion-used-by-car-rental-companies.html

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