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Transaction fee

Overseas consuming involves currency conversion from non-USD (such as local currency) to USD in third party payment processing. The conversion charges a certain amount of adjustment fee according to the bank policy. It is called Foreign Transaction Fee. The general fee is framed from 2.7% to 3% of the transaction amount.  Of course no one would be like to be charged by the extra amount. It can be avoided in some cases. For example, you can use the card without FTF. Specifically, do not used the card with FTF to purchase or consume in non-USD no matter online or offline.

However some places still charge 3% transaction fee if the card is issued overseas.

DCC is short for dynamical currency conversion. 

It is a service for online transactions from Visa/Master. Discover and Amex does not have this type of service fee. It generally means when card holder consumes overseas, he can choose to consume in his card billed currency converted from local amount by the real-time exchange rate.  Therefore the cardholder can instantly get how much spent in the local currency.  It is seems to be a very excellent function.

While the transaction consumed amount equals to local amount plus DCC rate. And DCC rate  equals to basic rate multiple  by ( 1 + currency exchange rate fee) .

The above is DCC operation formula. It is clear this is a big cost which exists in the fee.  The common transaction fee is around 3%. But DCC is much higher than this. For example, a purchase of 2400USD being charged by 100USD DCC fee. What a rip-off.

So for consuming at home, except FTF, DCC is also to be avoided.  It is very easy to avoid FTF, which you can use the card without the function.  If you want to avert DCC, according to Visa/Master, POS will provide options in local or USD settlement. You than can choose local currency. Or just directly ask the cashier to swipe in USD without conversion. 


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