How to Avoid Being Fleeced When Using a Credit Card Overseas

If you travel overseas, be warned: Pickpockets really are out to get you.

I don’t mean the light-fingered thieves who try to grab your wallet. I am talking about digital pickpockets: hotels, restaurants and shops that systematically overcharge foreigners who use credit and debit cards in their establishments.

A few weeks ago, my family ate at the café at one of India’s most famous tourist attractions, the lakefront City Palace in Udaipur. The waiter ran my Visa card, added 5 percent to my bill and gave me my charge receipt in dollars. When I protested, the manager professed ignorance and showed me how the machine did it automatically.

The tool used to nick foreign travelers goes by a fancy name — dynamic currency conversion. But its premise is simple: foreign merchants add a stiff markup to your bill, convert it to your home currency, then claim it benefits you.

In the City Palace case, the restaurant did not ask for my consent, which is required by both Visa and Mastercard. Unfortunately, this strong-arm approach is becoming more common.

As an American journalist who lives in India and travels frequently to other countries, I have seen businesses from neighborhood drugstores to hotels in the Marriott and Hyatt chains try to dupe me into paying their high currency fees.

Here’s how to avoid being fleeced.

Insist that charges be run in the local currency

Most of the time, when you make a charge overseas, the amount is sent to Visa, Mastercard or American Express in the local currency. The card networks convert the charge into your home currency at a wholesale rate and send it your bank, which might tack on an additional foreign transaction fee of 0 to 2 percent, depending on the card.