British holidaymakers are being issued an urgent warning to avoid a common airport pitfall that could see them lose hundreds of pounds before their holiday even begins. The culprit? A seemingly helpful option at currency exchange kiosks and ATMs known as Dynamic Currency Conversion (DCC).
The Costly Choice You Must Avoid
When using your debit or credit card abroad or at airport exchange bureaus, you may be presented with a 'helpful' option to pay in pounds sterling rather than the local currency. This service, called Dynamic Currency Conversion, might appear convenient but comes with a devastating financial sting.
Travel money expert Ian Strafford-Taylor, CEO of FairFX, explains: "This is one of the biggest travel money scams out there. They're effectively doing you a 'favour' by converting the price into pounds, but they're charging you an extortionate exchange rate to do it."
How This Scam Drains Your Wallet
The financial damage from accepting DCC can be substantial. While your bank might charge a modest foreign transaction fee (typically around 2.99%), accepting the merchant's conversion can slap you with hidden fees and terrible exchange rates that can add up to a 10% surcharge or more on every transaction.
This means on a £500 holiday spending money exchange, you could be losing £50 or more simply by clicking the wrong option. The practice is particularly prevalent at airport exchange bureaus, tourist attractions, and restaurants popular with visitors.
Your Simple Defence Strategy
Protecting yourself requires just one simple habit: always choose to pay in the local currency. Whether you're at an ATM, a retail store, or a restaurant, when prompted to choose between your home currency and the local one, always select the local currency.
This ensures your own bank handles the conversion at a much more favourable rate rather than the merchant's expensive third-party service. Additionally, consider these protective measures:
- Use a specialist travel money card that offers competitive exchange rates
- Inform your bank of your travel plans to avoid card blocks
- Check your statements carefully for suspicious charges
- Withdraw local currency before you travel for better rates
Fighting Back Against Predatory Practices
Consumer advocacy groups have long campaigned against DCC practices, arguing they lack transparency and exploit travellers who are unfamiliar with foreign exchange nuances. The Financial Conduct Authority continues to monitor these practices, but ultimately the power to avoid these fees lies with the consumer's choice at the point of sale.
Remember this simple rule: When abroad, always pay in the local currency. This one decision could save you enough money for an extra excursion, several nice meals, or even put a dent in your next holiday budget.
