Financial expert Martin Lewis has urged British holidaymakers to always choose to pay in the local currency when using credit or debit cards abroad, contrary to what many might expect.
Dynamic Currency Conversion Warning
When making card payments or withdrawing cash at ATMs in other countries, travellers often see their spend amount presented in both sterling and local currency. This is due to dynamic currency conversion (DCC), where the provider uses its own exchange rate, often adding significant fees.
Martin Lewis, founder of Money Saving Expert, appeared on This Morning to explain the pitfall. He said: "If you go to a machine abroad or an ATM, and you're in Europe, it says do you want euros or pounds. What it's actually saying is if it's euros, do you want your card to do the conversion; if it's pounds, we will do the conversion for you and then charge your card."
Why You Should Choose Local Currency
Lewis emphasised that using a specialist overseas card gives a near-perfect rate, and you want the card issuer to handle the conversion. He added: "Even if you haven't got a specialist card, even the bog standard pretty pants cards here tend to be better than the shop abroad doing it, where they put a massive wodge - it can be 6% or 7% on the exchange rate."
He also warned that overseas cash machines may add a fee on top. Lewis concluded: "So very simply, if you're in Europe and you're paying on a card, pay in euros. If you're in America, pay in dollars."
