Why the Online Exchange Rate Doesn’t Match Your Credit Card Statement

Card issuers are prohibited from embedding markups in currency exchange rates.
Claire TsosieDec 1, 2016
Why the Currency Exchange Rate on Your Credit Card Doesn't Match Your Online Rate

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Most of the time, your is easy enough to understand. But when you’re making international purchases, it can look more complicated than a game of chess.

Say you used a Visa credit card abroad. On your statement, those transactions would be converted from the currency of the country where they were made to dollars, using rates set by Visa. Those rates appear on your statement. You’d expect them to match the rates Visa publishes online — but they might be off.

ARE YOU GETTING A FAIR CONVERSION RATE ON YOUR CREDIT CARD?

NerdWallet compared more than 15,000 currency conversion rates to see whether Visa or MasterCard was better to use abroad.

That's not because Visa, or any other card network or issuer, is trying to pull the wool over your eyes. It usually has to do with two factors:

Here’s how those factors can affect your currency conversion rate, also called an exchange rate, and what it might look like on your credit card statement.

In the world of exchange rates, decimals abound. How your issuer rounds these numbers can change your exchange rate positively or negatively — but usually not by much. Here’s what you might notice:

For example, take these Visa purchases made in Icelandic krona. All of these transactions took place on the same day, so you’d think Visa would have used the same exchange rates. But because of rounding, there are slight differences starting in the sixth and seventh decimal places.

On June 19, 2016, when those purchases were made, 1 krona was equal to $0.008089, according to Visa’s currency exchange rate tool. Here’s how that number might have become 0.008094240, as shown for the first transaction:

As a result, the rate on the statement is a tiny bit higher than the one Visa published for that day. But it's not because there's a markup embedded in the rate, a practice that was prohibited under a 2006 court decision. Rather, it's the result of rounding.

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You might assume that your issuer will use the rates published on the day you made your purchase. But sometimes it’s more complicated.

Your statement also might not always list the date on which the exchange rate was applied. Sometimes it will only list the day your issuer funds the purchase through the card network, thus completing the transaction. This might be two business days after the day the merchant processed your purchase or longer, especially if you made the purchase near a weekend or a holiday.

If there’s a major discrepancy between the exchange rate on your statement and your network’s online rate, there’s no need to spend hours with your calculator trying to understand it. Just contact your issuer and ask.

If it turns out your issuer really did make an error, . If that isn’t successful, with the Consumer Financial Protection Bureau. Even if it was your issuer’s goof, it’s up to you to recoup your costs.

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