Credit Card vs. PayPal exchange rates
 

I am wondering if anyone has experience or an educated guess
at which might have a more advantageous exchange rate for people in the USA?

In the US most credit cards companies charge a 1% fee above whatever they charge for the exchange rate.
Capital One and Discover do NOT charge this 1% fee.
1. So does anyone have any knowledge about how PayPal handles foreign exchange?
2. Does anyone know which of the three have better foreign exchange rates in general?

And the outfit I wish to make a purchase from?
If you ride trains in Europe--keep reading. I wish to make a purchase from a UK website.
www.europeanrailtimetable.eu
{The link will forward to a different URL which is an enhanced order processing
site compared to their original site.
I expect it will maintain the URL in a few weeks or months when things get spiffed up.}
This is the publisher who has succeeded Thomas Cook's publishing of the famous railroad timetable.
[I am giving these details in case you did not know TC got out of the publishing business
and who has taken over the RRTT business.]

further info
 

Made a purchase from a UK seller on ebay and if I had funded it with a checking account PayPal showed the FX rate they would use. When I chose a credit card, it said that the rate would be determined by the credit card company.
The credit card rate was better.

yes, the paypal exchange rate is usually very unfortune for the customer...

Thanks for verifying.

Just to verify again. Basically did the same thing again with same results.

Note that on a $20 purchase, i.e. one directory, a 2.5% commission on FX works out to 50¢. I'm not sure why it matters which method one uses. Now if you're buying something that cost 10x or 100x more then that's a different matter.

It is not just commisison---Capital One and Discover do not charge the 1% commission most other credit cards charge. The exchange rates are not the same either. And indeed that is where the larger amounts are really going to ad up. Of course, the people on this forum are cheap [or stingy or frugal or thrifty]. If you know which has better savings in small things you will be more confident in the larger things.

Here in Canada the amazon.ca Visa (offered by Chase) doesn't charge any commissions of FX. They simply use the mid-bank rate. I've verified that this is the case. You can't get a better deal than that. I assume that's what CapitalOne and Discover do in the US.

As for pinching pennies, in principle I agree with you. However I've found that sometimes it's not worth the effort. For instance it's not worth getting a 0% FX conversion credit card just for a single $20 transaction. OTOH I use mine when in Europe to pay for all expenses that I can charge to a credit card. So for me the savings applies to several thousand dollars a year. That's significant.

> The exchange rates are not the same either.
The conversion commission rate varies by credit card. With credit card issued in the US it's typically 1% but can be as high as 3%. With cards issued in Canada it's typically 2.5%. Chase charges 0% on their CA cards but 3% on their US cards so it's important to do your homework.

And then there is this scam: Dynamic currency conversion

I bought something today from amazon.co.uk and they seemed to offer something like DCC also:
It could be avoided but seemed rapacious with the rate.

Both paypal and amazon conversions are usually worse than 1-1.5% charged by the bank. If you have a card that doesn't have those % for foreign charges (even if is a card from some small online-only bank, but of course without any other recurrent fee) it is worth having it handy just for such things.

There's also the issue with the ATMs - more and more are offering you their echange rate, i.e. you take for example 100 EUR cash and they charge your bank 150$ (I'm exagerating, just for simplicity). It doesn't matter if you have a good bank because they don't see your cash amount, they only see the 150$. For most ATMs you can chose to have it either the "normal" (ok) way or the above way (which is bad and usually default). Make sure you chose not to have the exchange or walk away (if you have the option because in some countries you might not - I mean all ATMs dispense local currency and take USD directly from your bank).