PayPal Currency Conversion Rate – How to Save Some Money?

PayPal is earning money every time you do currency conversion. For example, Philippine Peso to US Dollars. They are earning 2.5% of the total amount that you paid. There’s no way for you to avoid the fee but there’s a way for you to save some money. Here’s how.

Most of the internet merchants are using US Dollar currency. If you have US Dollar balance on your PayPal, it’s recommended that you use it to pay for your items. If not, don’t convert it. Instead, use your debit or credit card. Your bank or card issuer has the lower exchange rate compared to PayPal’s. During the checkout process, you need to login to your account. Before you submit your payment, you’ll see Other Conversion Options. Just click it. (See image below).

Other conversion options in PayPal
You’ll be prompted with two options:

1. The PayPal currency conversion process
2. The MasterCard and Visa currency conversion process

Choose the second option – Bill me in the currency listed on the seller’s invoice. The currency conversion will depend on your bank’s current exchange rate. You can refer to your bank’s website for current exchange rate and compute for the total amount that will be charged on your card plus the exchange fee. Not all banks have the same rate for the fee. It ranges from 1.0% to 2.5%. Yes, the rate might be the same with PayPal’s but still you can save some money. How?

PayPal Conversion Options

Let’s take this as an example, last July 12 I bought 3 CDs online amounting to $40.33 in total. If I use PayPal Currency Conversion Process, this is the total amount that I’ll  pay:

Total Item Price + Shipping Fee: $40.33
PayPal’s Exchange Rate + 2.5% Exchange Fee: PHP44.53 per USD
Total Amount Paid (Converted Local Currency): PHP1795.89

And this is the total amount that I will pay if I choose the The MasterCard and Visa currency conversion process:

Total Item Price + Shipping Fee: $40.33
Bank’s Exchange Rate: PHP41.396 per USD

Total Amount Converted: $40.33 = PHP1669.50068
Exchange Fee: PHP42.80 = USD1.034
Total Amount Paid (Credit Card): PHP1712.31
Savings (Compared to PayPal’s Exchange Rate): 83.58 ($2.XX )

Total Item Price + Shipping Fee : $40.33
PayPal’s Exchange Rate + 2.5% Exchange Fee: PHP44.53 per USD
Total Amount Paid (Converted Local Currency): PHP1795.89

The higher the amount, the higher the savings you can get. So always use your card every time you pay using local currency.

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