Martin Lewis has clarified the best currency to use when paying by card abroad, advising holidaymakers to always choose the local currency over pounds sterling. This simple switch can save significant money on exchange rate fees.
Appearing on BBC, Lewis explained: "When you go abroad and you pay on plastic and the overseas cash machine or shop asks you: 'Do you want to pay in Pounds or Euros?' What do you do? Well, the correct answer is you should always pay in Euros or whatever the local currency is."
How dynamic currency conversion costs you
Lewis stressed that paying in pounds triggers dynamic currency conversion, where the overseas shop or ATM sets the exchange rate, often with added fees. Paying in local currency lets your bank handle the conversion, typically at a better rate.
"That means it's your plastic that's doing the exchange rate conversion, not the overseas shop or ATM," he said. This principle applies worldwide.
Social media users share their tips
Viewers chimed in with recommendations. One suggested: "Just get Revolut or Monzo." Another said: "I use Starling Bank it has no fees abroad and recommends paying in the local currency instead of Pounds. Something I saw online about dynamic exchange rate and it can cost you more otherwise."
A third commented: "Revolut has always been the best on doing this, can exchange right in the app as well, and when withdrawing it'll just take it straight from that, half the time the only fee is the cash fee by the machine you use."
A recent traveller to Spain noted: "Not a single ATM did free cash withdrawals either, thankfully that's all I was charged with my Chase account." Another said: "I just get Euros before I go anywhere save all the hassle, and if I'm really stuck for cash go into an actual bank on holiday and withdraw money on my card."
Travel insurance: get it ASAB
Lewis also emphasised getting travel insurance as soon as you book (ASAB). On This Morning, he said: "My travel insurance rule is get it ASAB (as soon as you book). People do get a little confused about this, so let's break it down."
For single-trip policies, he advised: "As soon as you book, you go on one of the travel insurer's website, you tell it your holiday dates and you buy the policy then." If your holiday is in August and you booked in January, insurance should be arranged in January.
"That means you have the travel insurance in place to cover that holiday," he said. "You don't need to cover yourself for extra dates because you have your return date. If something delays you, so you weren't back, that would still be covered because that delay is all part of the travel insurance."
