Saturday, 28 August 2010

Credit Card Payment Warning

Taking for granted that all of our payments are nowadays usually made by credit cards, the assumption is even more taken for granted when considering the expenses made during a trip.

There are, anyway, few things you should know before travelling to the UK on how to use your credit card.

First of all, be aware that in the UK swipe credit cards are no longer used. Some retailers’ cashiers could also say you that credit cards with no chip are even illegal. Although this is absolutely wrong, it is nonetheless true that in London swipe credit cards are no longer issued and that, bit by bit, they won’t no longer be accepted at all.

All the major chains, shops and retailers actually still have the opportunity to swipe your card, but be ready to face some resistance, especially if you will be paying for a small amount, on accepting such a type of card.

But this is not really the only thing you need to know when using your credit card in London.

When you are paying by credit card, whatever the thing or service you are paying, the card is recognised by the processing system as a foreign card and some retailers, like Harrods, but it also could happen in some hotels, will charge your credit card with an amount already converted in your local currency, for instance Euros. This is really everything but convenient for you, in that the conversion rate but, most of all, the commissions they apply to you will be particularly high.

This could also happen at the airport duty free shops, at Stansted for instance, the difference is that whilst at the airport the cashier is actually asking you if you do prefer to be charged in pounds or in your local currency before processing the payment, at Harrods cashiers are directly processing the payment in your local currency, without any warning. This, in some cases, can also account for making the final price you pay for a particular item sensibly more expensive than you were supposed.

What worse, although untrue, the slip they will give you as a receipt for payment clearly states that you have been warned of the fact to be paying in your local currency before processing the payment, that you agreed with that and that that is even your choice.

As anticipated above, this could also happen when you’ll be paying your hotel bill. Even though you have made your reservation online, in fact, many websites do not charge you any amount of money, or charge you just a small percentage of the total cost, at the moment of booking, so that you’ll be paying the whole cost at the hotel reception once there. Well, in that occasion, it may happen that the receptionist, without any warning, will charge your credit card, for the total amount or for the balance due, in your local currency, at a very unfavourable exchange rate.

The problem is not, instead, occurring if you’ll pay your bill with a debit card, the payment is immediately processed by your bank and you’ll pay the usual commission as stated in your initial agreement signed with your bank.

According to the amount of money you have to pay, the difference could really be not that much irrelevant, so be careful.

If you are short of cash and need it and you both have a credit and debit card, avoid to use your credit card at any ATM (hole in the wall) and use instead your debit card to withdraw any amount of money, commissions, in this case, are, in fact, sensibly lower.