A Valuable Lesson Learned

A Valuable Lesson Learned

Friday morning I woke up and, like the rest of the world, heard about how the United Kingdom had voted to leave the EU.  And that the Prime Minister of the UK had resigned as a result. And, before I could even ponder the repercussions myself, that the value of the British pound had plummeted as a result.


My initial reaction was shock. The second reaction, however, was glee. Why? Because I am going to the UK in about three months, and the news about the value of the pound means that my dollar is going to go a little farther than it would have before the Brexit vote.

I immediately Googled “pound to dollar exchange rate” and saw that a British pound was valued at $1.36. This is 10 cents per pound cheaper than it had been the last time I checked the exchange rate, pre-Brexit. I decided it would be an advantageous time to buy in advance anything that could be bought in advance. (Primarily admission tickets for the attractions we would be visiting, since – sadly – I had already booked and paid for the big-ticket necessities like lodging and car rental.)

I only had three things left to pay for that could be purchased online. I charged them and printed out my confirmations, but then I got an email from my credit card company to notify me that new international transactions had been charged to my account. Since I knew it was definitely not a case of fraud (having charged those transactions myself), I didn’t pay much attention to them. But the amount charged seemed a little high, so I did the math and rather than getting charged $1.36 per pounds (or anything even close to that, I was charged $1.49 per pound.

I will spare you all of the details of the two hours I spent on the phone with Capital One and Visa, and then Capital One again. Suffice it to say that no one could tell me why there was such a discrepancy in the amount I was charged versus what the actual rate of exchange was. The closest I got to an actual concrete answer was that the credit card companies go by the highest (least advantageous to consumers) rate within a 24 hour period.  Maybe that’s the case, maybe not… no one seemed to know for certain.

But what I did learn – and what you can do to work the exchange rate to your best advantage – is as follows:

  1. Visa determines what the exchange rate for foreign transaction fees, not the bank that issues your Visa card (in my case, Capital One).
  2. The rate that Visa charges is going to be slightly higher than the actual exchange rate.
  3. You can (and, in hindsight, most definitely should) check what rate you will be charged on the Exchange Rate Calculator at the Visa website. Do this before making your purchase, so you won’t be unpleasantly surprised like I was.
  4. Banks that issue credit cards can charge up to 5% for foreign currency transactions. Make sure yours doesn’t.
  5. The customer service at Capital One is excellent. Despite my very high frustration level I received nothing but VIP treatment. (Wish I could say the same about Visa, but I can’t.)

Number 3 is the big take-away from this experience. Check the rate with Visa before you charge!


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