Dynamic Currency Conversion

There is a very interesting article up on Washington Post that talks about dynamic currency conversion. Basically, this involves an additional transaction when using your credit card overseas to make purchases. It is supposed to be "convenient" for the consumer so that the cost can be seen in the consumer's home currency. But what is the cost of this convenience? That's what the article takes a look at. Here is an embedded currency converter:



Here are some ideas for a lesson plan around this article and currency conversion:

(1) What country would you like to visit most? Estimate the costs of a flight there, food, lodging, transportation, souvenirs, etc. This could all be done in dollars. This could be enhanced by looking up actual rates online, as this will give practice of finding and interpreting deals online for traveling.

(2) Compare the costs for each of the items with how much it will cost with each of the different modes of converting currency. These include, but aren't limited to, using direct cash conversion, using traveler's checks, credit card without DCC, and credit card with DCC. Remember that each of these come with their own conversion commissions. See which one offers the best price overall, and what the price difference is. What is the "cost for convenience?"

(3) Find out what the foreign exchange fees are for yours or their own credit card and compare with the average that's given in the article (~3%). How much money does this amount to?

(4) An investment type of question that requires research: Imagine that you had the equivalent of $10,000USD in a major (or maybe not so major) foreign currency. Based on the current economy and historical fluctuations (click here for viewing historical data), do you think it would be better after 2 years to have exchanged it back to USD (with the exchange fee) or not exchanged it back at all? How does this compare with how 2 years ago would compare to the present?