* depending on your use pattern and the specific Mastercard you are using.
Two weeks ago, I took my Revolut card and my wife to the Czech republic. This is the second attempt to write about that after my account got locked for no apparent reason. Me and my wife paid on multiple occasions with my Revolut and with her Number26 Mastercard.
As of the time of this writing (2016-02-07), Revolut charges no fees at all. Top-Up, paying in stores and money withdrawal are free in all currencies. For a coequal comparison, we also took our Number26 Mastercard with us, which also features free everything. Both cards claim, they also come without hidden fees.
The Exchange Rates
Let’s now look at the hard facts. We used the Revolut card five times and the Number26 card three times. As all five Revolut payments featured exactly the same exchange rate, I am limiting it to three examples within that set.
Revolut payments between January 23rd and January 24th 2016 (click to enlarge)
As you can see from the screenshots, the conversion rates are as follows:
- Withdrawal: 26.7379, no fee
- POS payment: 26.7379, no fee
- POS payment: 26.7379, no fee
Number26 payments between January 23rd and January 24th 2016 (click to enlarge)
The Number26 card shows more variety in conversion rate:
- Withdrawal: 27.12967, no fee
- POS payment: 27.11585, no fee
- Restaurant payment: 26.90824, no fee
The Revolut card has an average of (who would have guessed) 26.7379 CZK/EUR, the Number26 averages at 27.05125 CZK/EUR and therefore has a conversion rate that is slightly more to our advantage. Doing the math, it is about 1.2 percent better than Revolut. In this battle, Number26 is the winner. 1.2 percent does not sound a lot, but if you are paying two weeks worth of hotel and a couple of dinners, this might easily add up.
Fixed weekend exchange rate
For Revolut, the exchange rate between CZK and EUR was not changed a single time during the trip. My best guess is, that there is no foreign exchange trading on weekends, so Revolut is fixing the exchange rate. They seem to factor in a risk premium of about 1 percent. This fact only becomes apparent, because Revolut is one of the very few cards (if not the only) that use the authorization date instead of the settlement date for the currency conversion.
Number26 resulted in having different conversion rates, because they were fixed some day in the following week.
Update 2016-09-26: It seems like they now have more precise information in the faq as a comment states.
It’s a gamble
Having a discrepancy in currency conversion dates, deciding which card to use basically comes down to a gamble. Will the currency get stronger or weaker over the next couple days? In case the foreign currency gets stronger, you want to pay with Revolut so you pay for your foreign currency, before the price increases. However, should the currency get weaker, favor the Number26. On average two to three days pass between purchasing in a store and settlement of the transaction. Did the exchange rate drop, you profit from a cheaper price for the currency.
Revolut more transparent
Let’s put the gambling aspect aside. After all, on average those fluctuations should even out over time. Whether or not Revolut has the better conversion rates in the long run is nothing that can be tested by spending a weekend in another country. However one big advantage of Revolut stays and makes this card and app excel. It will tell you, how much your purchase in a foreign currency will cost you right now. There will be no surprises days later when the exchange rate changed to your disadvantage. This gives you more control over your spendings and makes it easier to plan, should you be on a tight budget.
Paying in local currency is not always better
Revolut suggests to pay in local currency whenever the choice is given, because many business owners and ATMs participate in a practice called DCC, Dynamic Currency Conversion. With this (anti-)service, the payable amount is being converted to the card’s currency. This usually comes at a premium of 4-5 percent. Advocates of DCC argue, that this is an extra service, so the cardholder would know the final price in their familiar currency. Using your Revolut card, this service comes free with their app.
But not all of them are bad apples. The Iron Gate Hotel, which I paid extras at with my Revolut card offered to bill me in EUR. I declined and asked to pay in CZK with my Revolut card, at an exchange rate of 26.7379 CZK/EUR. The front desk clerk printed out the invoice which featured a EUR and a CZK amount. Their conversion rate: 27CZK/EUR. That’s fair (and would have been better than with my Revolut).