Maria Adams, Credit Cards Moderator
The usual credit card exchange rate used for purchases made abroad is 2-4%. Credit card networks (i.e. Visa, Mastercard, American Express, and Discover) generally use conversion rates based on interbank rates they select from customary industry sources on the business day prior to the processing date.
Visa and Mastercard provide calculators you can use to get an indication of the rate you may receive when using your card abroad.
Other things to know before using your credit card abroad:
When shopping abroad, a merchant may ask you if you would like to convert your credit card transaction from the local currency into U.S. dollars. This is called Dynamic Currency Conversion (DCC). This conversion rate is very expensive for the cardholder and should be avoided. Generally, when overseas merchants make this offer, they will use a conversion rate that is far higher than the actual going rate – as much as 7 percent higher.
When making foreign transactions, you should also be aware of foreign transaction fees. These fees are tacked on to any point-of-sale purchases outside of the United States, or purchases made through an internationally-based merchant. So, it’s best to use a credit card with no foreign transaction fees in this case. Some good examples include the Capital One Venture Rewards Credit Card and Chase Sapphire Preferred® Card.
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Linda L. Jacob, Certified Financial Planner (r), Accredited Financial Counselor (r)
This varies from card to card. You can call the number on the back of your card and they will tell you how your account conversion will be calculated.
Using a credit card usually gets you a better exchange rate then converting cash at the airport or at the hotel. You will also have the backing of the credit card company should a problem arise with your account.
I actually found the answer to my question:
The exchange rate is set daily except wekeends and hollidays by the credit card. Not by the issuer ,meaning not by the bank or company that issues the card, but by Visa or MasterCard or Amex itself. Additionally on a 2006 law suit it was stablished no one could mark the rare up. So whatever rate is set by let say Visa will be similar ( normally better) than what you get if you go exchange money or if you Google the current rate online in the open market if you were buying and selling currencies..
One last important point, the Visa rate ( or MasterCard or discover etc) only applies if you elect to pay in that country currency. In many tourist areas , the credit card machine knows your credit card is from USA, so it will ask if you want to pay in dollars or whatever that country uses , choose that country , other wise you don't get the VISA conversion rate , you get the merchant , and it's way worse .
So all Visa or MasterCard or discove or Amex, no matter the annual fee will have the same exchange rate when you buy something on a foreign country if you choose to pay in that country currency.
So get a credit card with no yearly fee and no foreign transaction fees and you are set to shop till you drop in any country.
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