Martin Lewis has warned that a simple mistake at an overseas ATM could cost travellers hundreds of pounds. The money-saving expert appeared on ITV's This Morning on Tuesday to explain why holidaymakers should always choose to pay in the local currency rather than pounds.
Lewis said that when an ATM or card machine asks whether you want to pay in pounds or the local currency, it is essentially asking who should handle the currency conversion. If you choose pounds, the foreign operator converts the money and often adds a significant markup, sometimes as high as 6 or 7 per cent.
This practice, known as Dynamic Currency Conversion (DCC), allows foreign retailers and ATM operators to convert transactions into pounds at the point of sale. According to consumer group Which?, the exchange rates offered are frequently far worse than those available through banks and card providers.
Lewis noted that many travellers now use specialist overseas spending cards that offer exchange rates close to the interbank rate. In such cases, allowing the card provider to handle the conversion typically yields a better deal. He added that even standard debit and credit cards often offer more competitive rates than foreign ATMs or retailers.
He cautioned that some cash machines actively push users towards choosing pounds because it is more lucrative for the operator. His advice was clear: always opt for the local currency, whether in Europe, the United States, or anywhere else abroad.
