Swiping Your Card Abroad? Save Thousands By Avoiding These Commonly Made Mistakes!

Swiping Your Card Abroad? Save Thousands By Avoiding These Commonly Made Mistakes!

19 May, 2023

We are so used to spending in our home currency that purchasing something in a foreign currency can be quite confusing. Swiping your Credit Card for the same can simplify it, if you decide to use Dynamic Currency Conversion (DCC). DCC transactions, though convenient, may not be the smart choice always. Confused? Let us clarify.

DCC transactions are transactions carried out in ₹ at an international location or at merchants which are in India but registered overseas. The international merchant recognises that an Indian Credit Card has been used and gives you the option of paying in ₹. The exchange rate and the amount in ₹ are prominently displayed. For the merchants, DCC enables them to offer products and services to their overseas customers in a more transparent manner. Do remember, instead of using the term DCC, the merchant may simply offer you the option of foreign or native currency payments.

While this convenience makes DCC payments popular among merchants as well as cardholders, you must exercise the option judiciously. Know the Credit Card benefits, are you ready to swipe? Want to know more about Credit Cards? Click here to get started!

DCC and non-DCC Payments

If you pay for your international purchase in the form of a DCC payment, your order summary will reflect the cost of purchasing the product in ₹ value. But in a non-DCC scenario, the order summary will be available in the store outlet’s or e-commerce site’s native currency.

It is observed that the exchange rate in DCC payments is much higher than the exchange rate in non-DCC payments. So, while making a DCC payment may seem convenient, it might end up costing you significantly more than a non-DCC payment.

Leaking money through DCC

While shopping on an international website or overseas, if you are given a choice of paying in your currency or foreign currency, your currency may seem like the more logical choice. It may seem unusual that payment in a foreign currency will, in fact, be more economical.

The exchange rate used for DCC calculations includes an exchange rate guarantee fee that makes it the more expensive payment option. Any overseas payment, be it DCC or non-DCC, will involve a markup percentage and GST thereon. This markup is lower in the case of DCC payments (1%) in comparison to non-DCC payments (2% to 3.5% basis product variant). However, the presence of an exchange rate guarantee fee in DCC makes the total transaction amount more expensive even after adding a lower markup fee and corresponding GST.

The presence of exchange rate guarantee fee is the main problem in choosing DCC payment. In a non-DCC payment, the exchange rate used are closer to prevailing market rates. You may think that since you are paying in ₹, the foreign transaction fee will not apply. However, this is not the case, as starting January 1, 2023, a 1% DCC fee plus GST is applicable on such transaction.

Therefore, you could try to avoid DCC payments if you want to prioritise cost savings over convenience in short, an HDFC Bank Credit Card makes Beautiful Possibilities. Ready For You.

Looking to apply for a Credit Card? Looking to apply for a Credit Card? Click here to get started!

Did you know you can activate your international use on your Credit Card? Click here to read more!

​​​​​​​*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.

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