Login to Internet banking
A brand-new experience - smarter, faster, and secured
Introducing the First-in-industry IDFC FIRST Bank's Super Account
Request a Callback
You gain a dedicated partner committed to helping you reach your full potential and achieve new heights
Know More- Account with Auto-Sweep FD
- Account for all Domestic businesses
- Account for Importers & Exporters
- Account for Start-ups
- Accounts for Trusts/Associations/Societies/Clubs
- Account for Merchants
- Account for Agri Traders
- Account for Self-employed professionals
- Special Purpose Accounts e.g. SNRR, RERA, EEFC
BRAVO (Auto Sweep)
Convert the idle funds in your current account into a fixed deposit with the BRAVO feature.
Know More
Streamline your export process with digital convenience with IDFC FIRST Bank's Export Solutions
Know More
Make more than one online payment in just a few clicks with IDFC FIRST Bank Bulk Payments
Know More
Most Searched
Enjoy Zero Charges on All Commonly Used Savings Account Services
Open Account Now
Download our app
Get instant help for all your queries in one place
Explore Personal
- Accounts
Tools & Calculators
Privilege Program
- Privilege Program
Unlock features, exclusively available
only on the IDFC FIRST Bank app
FinFIRST Blogs
Credit Card
Explained - Dynamic currency conversion for international travel
Key Takeaways
Paying for an international transaction in Indian Rupee (INR) is called dynamic currency conversion (DCC).
- DCC rates are often less favourable, and you also incur an additional DCC charge. To avoid added costs, pay in the local currency and choose the right credit card.
- The FIRST WOW! and FIRST WOW! Black Credit Cards from IDFC FIRST Bank have zero forex markup fees for cost-effective transactions.
Imagine you are on an international trip to the United States of America (USA) and have just had a wonderful meal at a renowned restaurant. You get the bill with two options in front of you:
Option 1 -
The bill shows the total amount in the local currency, i.e. US Dollars (USD)
Option 2-
The bill also shows the total amount in Indian Rupee (INR) with an offered exchange rate and an additional fee
If you choose the first option, you can simply pay the bill in USD. In the second option, you can see and pay the total cost in INR without doing complex conversions. The option works on the concept of DCC. Let’s understand what it is.
READ MORE
What is a DCC transaction?
The full form of DCC is dynamic currency conversion. A DCC transaction occurs when you pay for international transactions in your home currency. For example, paying a USD bill in INR allows you to know the exact cost in INR at the time of payment.
How does DCC work?
The amount is mentioned in the local currency and INR when transacting at an international ATM or Point-of-Sale (POS) terminal. This gives you two payment options. In the latter case, an exchange rate is also mentioned.
If you choose the second option of paying in INR, the amount is converted to INR at the specified exchange rate. An additional fee is also charged for the conversion, which is over and above the Forex markup fee charged by your credit card issuer. This completes the DCC transaction.
Benefits of DCC?
Choosing dynamic currency conversion at the ATM or POS terminals has some benefits. These are -
1. Expense tracking
One of the main benefits of DCC is that you can know the exact cost of your transaction in INR upfront. There’s no need to convert the costs whenever you want to pay for something. You can keep track of your expenses to ensure that your travel budget is not hampered by overspending.
2. No complicated calculations
When you choose DCC, you don't have to do complex calculations to figure out the transaction costs in INR. The converted amount is shown at the outset, helping you escape currency conversion calculations.
3. Guaranteed exchange rates
If you choose DCC, the exchange rate offered during the transaction is fixed for currency conversion. Later on, even if the rates fluctuate, the converted amount will not be affected. Alternatively, if you don’t choose DCC, your credit card issuer might convert the transaction’s value at a later date. Since the exchange rates keep changing, you might end up with an unfavourable rate when the conversion happens.
Drawbacks of DCC
Despite the benefits, DCC is best avoided because of its disadvantages. Some of the primary drawbacks of using DCC are as follows -
1. Unfavourable exchange rates
Usually, the exchange rates offered under DCC are unfavourably compared to current market rates. For instance, if the current exchange rate of USD 1 is ₹84.10, you might have to pay ₹85 or more for USD 1 under DCC.
The unfavourable exchange rates incur a loss on conversion, making DCC an avoidable choice.
2 Added cost
Most credit cards charge a forex markup fee for international transactions. This fee facilitates international transactions on the card and is an added cost. In addition to this forex markup fee, there is always an additional charge for choosing DCC, which inflates the overall cost of the transaction.
3. Hidden charges
DCC charges might not be stated upfront, which makes them a hidden cost. When you get your credit card bill, you might discover high DCC charges, which prove to be an added expense.
The recommended course of action
The drawbacks of dynamic currency conversion far outweigh its merits. That is why it’s best to avoid DCC as much as possible. Thankfully, DCC is voluntary, and you can opt out. Instead, here’s what you can do when paying for international transactions -
1. Choose the local currency
Paying in local currency is the best way to avoid paying DCC charges and incurring unfavourable exchange rates. You can pay in cash or use your credit card for your transactions.
2. Look for favourable exchange rates
If converting INR to international currency, look for institutions offering favourable exchange rates.
3. Choose the right credit card
The right credit card also helps in saving on international transactions. Look for a card that is globally accepted, has low forex markup fees.
The FIRST WOW! and FIRST WOW! Black Credit Cards can be the right choices for your international travel. Here’s how.
FIRST WOW! and WOW! Black Credit Cards - Your smart travel partners
The FIRST WOW! and FIRST WOW! Black Credit Cards are secured cards offered against a fixed deposit (FD). They offer guaranteed approval, are globally accepted, and have zero forex markup fees. This means you don’t have to pay additional charges for international transactions. Moreover, if you avoid DCC and pay in the local currency, you can also avoid the DCC charges.
That’s not all! You also get a host of benefits like:-
FIRST WOW! Credit Card
1. Up to 4X reward points on your spends
2. Lifetime free credit card
3. Zero-interest cash withdrawals for up to 45 days
4. Credit shield protection against theft and fraud
5. Low interest rates that start from just 8.5% p.a.
6. Complimentary roadside assistance cover
FIRST WOW! Black Credit Card
Up to 4X Reward Points on your spends
Up to 50 Bonus Reward Points on Hotel & Flight bookings through IDFC FIRST Bank Mobile App
Welcome Benefits worth ₹5,000+ on Joining Fee Payment
Zero-interest cash withdrawals for up to 45 days
Complimentary UPI-enabled Virtual Credit Card linked to your FIRST WOW! Black Card, from day one
4 Complimentary domestic lounge access every year
Trip Cancellation Cover worth ₹10,000
Low interest rates that start from just 8.5% p.a.
Complimentary roadside assistance cover
Credit shield protection against theft and fraud
Travel the world, cost-effectively!
If you are planning an international trip, understand the concept of dynamic currency conversion and how it works. Avoid it to save on hidden charges and bad exchange rates. Pay in the local currency, either in cash or with the FIRST WOW! and FIRST WOW! Black Credit Card and save on the added charges.
Be a smart traveller. Choose the FIRST WOW! or FIRST WOW! Black Credit Card and make your trips cost-effective without compromising on the thrill.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
Summarize with AI
