Martin Lewis has issued crucial advice for Brits heading abroad this summer: always choose to pay in the local currency rather than pounds. The personal finance guru warns that opting for sterling conversion at ATMs or card terminals can lead to excessive fees.
Understanding Dynamic Currency Conversion
When withdrawing cash or paying by card overseas, travellers are often asked whether they want to be charged in pounds or the local currency. While paying in pounds may seem simpler, it typically involves dynamic currency conversion (DCC), where the retailer or ATM applies its own exchange rate—often significantly worse than the standard rate.
Lewis explained that DCC can add 6% or 7% to the exchange rate, eating into holiday budgets. He recommends using a specialist overseas card that offers a near-perfect exchange rate, ensuring that the card provider handles the conversion instead.
Key Advice from Martin Lewis
- Always select the local currency (e.g., euros in Europe, dollars in the US) when paying by card or withdrawing cash.
- Use a dedicated travel card that provides competitive exchange rates without hidden fees.
- Avoid letting the merchant or ATM operator perform the conversion, as they profit from unfavourable rates.
Lewis emphasised that even standard UK cards often offer better rates than the DCC offered abroad. He urged holidaymakers to insist on paying in the local currency, even if prompted repeatedly to accept sterling conversion.
With summer getaways underway, following this simple tip can help households keep more money in their pockets while enjoying their holidays.
