Renting a car in a foreign country? The rental car company will likely offer you the choice of being charged in local currency or U.S. dollars. Buyer beware: One of these options is a big currency conversion rip-off. Here’s how to make the money-smart choice every time.

Why Dynamic Currency Conversion is Such a Rip-Off

So why is this such a big currency conversion rip-off? Dynamic Currency Conversion masquerades as a convenient service that offers a choice. You can either pay in the local currency or in your home currency. Choose to pay in U.S. dollars, and the rental company converts the amount on your behalf. This process entirely unnecessary, since your credit card will process the transaction in either currency. In addition, you will pay through the nose for the non-convenience.

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Also, while a rental car company can only provide an estimate in your home currency. The rate is always guaranteed only in the local currency. That’s because foreign exchange rates will change slightly between the time of reservation and the time of pickup. The rental car company always confirms a reservation in local currency and a renter should always pay in local currency. There’s no reason to give the rental car company a “convenience fee” of 3 percent on top of a consumer-unfriendly exchange rate determined at the sole discretion of the rental car company.

Choose Your Credit Card Wisely When Renting a Car

In general, when using a credit card with no foreign transaction fees, there is no reason to pay a rental car company (or hotel, or shop, or restaurant) to bill you in anything other than the local currency. When you let the business process a conversion from a local currency to your home currency, it effectively guarantees an unfavorable exchange rate along with some percentage fee for the so-called convenience.

As a renter, you have hopefully made a conscious effort to sign up for credit cards that provide car rental insurance with no foreign transaction fees. We are big fans of products like the Chase Sapphire cards, which provide primary damage waivers on rental cars so that personal auto insurance coverage never comes into play.

Sneaky Ways Rental Companies Rip You Off

Rental car companies use two different tactics to nudge renters towards accepting dynamic currency conversion. If you’re a member of the company’s loyalty program—and everyone should be— you may have been asked about dynamic currency conversion during the enrollment process. Alternatively, you may be offered this option for each individual rental contract when you are traveling outside the country.

Opt Out of Dynamic Currency Conversion in the Loyalty Program

A few companies, including Avis, make dynamic currency conversion an option as part of the loyalty program enrollment process. This option comes up when you are adding or modifying a credit card.

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Be aware that companies can enroll users in dynamic currency conversion by default. Members of the Avis Preferred program will receive a notice that the user will be enroll in DCC unless he or she opts out. In other words, Avis explicitly enrolls Preferred members into this unnecessary and costly service unless he or she unchecks the selection.

Opt Out of Dynamic Currency Conversion on the Rental Car Agreement

Other rental car companies offer the currency conversion option on each individual contract. Renters are given the choice of being billed in local currency or allowing the rental car company to bill in your home currency. If you opt for the latter, you are letting the rental car company determine the exchange rate and charge a fee for the so-called service.

For example, Hertz calls this service “Choose Your Currency.” Again, renters would be better served simply by instructing Hertz to process all charges in the local currency.

If you belong to a rental car loyalty program, go online and take a few minutes to update your credit card information on your account and opt to pay in local currency. The next time you rent a car internationally, be sure to check the contract carefully and, again, opt to pay in local currency. This seemingly small tactic can lead to big savings.