Several months ago my wife and I quit going to Oh-Sushi, our then-favorite restaurant for Sushi. The reason we quit going wasn’t the food, but the fact that every time I used my Capital One card, I was being charged in U.S. Dollars (at a really bad exchange rate) rather than being charged in Polish Zloty.
They claimed that the machine processed the transaction automatically and there was nothing they could do about it. While I would have liked to believe them, I never had a problem before – so I wrote about it and we just stopped going to that restaurant. We found another Sushi place that took my Capital One card and always charged me in PLN rather than USD.
I was ready to write it off as an uncooperative merchant, but recently I went with a big group of people to another restaurant in Wilanow called Castello’s. I paid for the whole bill with my Capital One card and imagine my shock when I went to sign for eh card and noticed that they had already converted the Exchange rate for me into USD – at a really terrible rate (3.25 vs. the rate of the day which was closer to 3.75).
I was a bit livid and tore into the guy for charging me in USD. He insisted (and I believe him) that the machine automatically calculated the amount, probably based on the fact it was a US Dollar-based credit card.
I started to see a pattern. So I went back to Castello's this past weekend and paid with my shiny new Charles Schwab card. There was no problem paying in Polish Zloty and I got the fair exchange rate and presumably I will get back the full 2% back in cash rebates.
I cannot find anything about this online, but it looks to me that Capital One and Polcard have an agreement that in some establishments (possibly limited to certain restaurants), the credit card will be charged in the base currency of card. Polcard makes a substantial profit from the crappy exchange rate, and I assume that somehow there is an incentive for Capital One because they do not charge a foreign currency transaction fee.
This is yet another reason to ditch my Capital One card. I unfairly blamed the restaurants, but now I see this is definitely a problem with the credit card company – specifically Capital One.
My advice - If you do use a Capital One card overseas - carefully monitor how you are being charged. If ever given the option select the local currency, and if not given the option - use another credit card.
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