Choose the local currency when the machine asks

You hand over your card in a shop, a hotel or a restaurant abroad, and the machine asks a question that sounds like a kindness: would you like to pay in your own currency? The cash machine asks the same thing, with a rate on the screen and a button that says it will lock it in for you. It is not a kindness. It is called dynamic currency conversion, and the rate it offers is set by the shop or the machine, with a markup that they keep.

When a card machine or cash machine abroad offers to charge you in your own currency, say no and choose the local currency; your own bank’s conversion is usually the cheaper one.

Many people say this: when a machine abroad offers to convert, choose the local currency, because the merchant’s or the machine’s rate is almost always worse than the one your card network or bank would use. Two more say the same about card payments specifically. Some people say it saved them money, and one who had booked the cheapest flight they could find says the small saving mattered.

Why the offer costs you

One question people ask is why any business would offer a more expensive option at all. Some people give the answer: because it earns them money, and because the prompt is confusing enough that people accept it without meaning to. When you choose your own currency, the conversion is done by the business or the machine’s operator at a rate they choose, often with fees on top. When you choose the local currency, the conversion is done by your own card network and bank, at their rate.

The European Union wrote the mechanism into law. Since April 2020, anyone offering this conversion at a cash machine or a till in the EU has to show you, before you pay, the total charge as a percentage markup over the European Central Bank’s daily rate, and tell you that you can pay in the local currency instead. If the percentage is on the screen, read it. The rule is written for payments inside the EU, so with a card from a bank outside it, or anywhere outside the EU, you may see only a rate and a total, which is all the more reason to decline.

One person adds a fairness point about the prices themselves: businesses that sell to foreigners set their local prices partly on where they expect the rate to be in a few days, to cover their own costs, so the local price is not an arbitrary squeeze. The conversion offer on top of it is where the squeeze is.

Where it hides

The prompt is designed to be easy to get wrong. One person says the cash-machine screen is laid out so that declining the conversion looks like cancelling the whole withdrawal, and some people warn the “decline” button on some machines is worded as if it will cancel the transaction. Read slowly, and look for the words that mean “without conversion” or the local currency’s name.

It turns up in places you do not see. One person says hotels often apply it automatically at fast checkout, on a card they already hold, and one person warns it can happen without your consent. The same account says to ask to watch the payment go through so you can see it is in the local currency. One person says it has become a common trick among hotels and budget airlines, and one person adds car rental desks. It is not one country’s habit: people answering someone who thought it was a Mexican problem said they met the same prompt in Spain, Italy and elsewhere in Europe, and five said it happens in most countries, not just one.

Online, it looks different. One person describes checking the live exchange rate in another browser tab before confirming an airline booking priced in their own currency, and finding it cheaper to book in the local one; they later worked out the saving at about forty dollars on one flight. One person warns some airline sites only let you pay in the local currency if you switch the site to the local language. Another account says the airline itself does not set that rate — an outside company does the conversion and keeps the markup — and two thought the difference might have been an anomaly of the day’s rates rather than a policy. One person says some online payment services and marketplaces convert at similarly poor rates, and one person checked one against the live rate and found the same gap.

The exceptions, and why they are exceptions

Declining is not always right, and people argue about it honestly. In one exchange, some people say always decline, it is worse than the network rate, and one says not always — if your own bank charges a high foreign transaction fee, the machine’s offer can come close. In another, two call local currency a universal rule of thumb and two say it depends entirely on your card’s fee and the rate it uses. The decider in both is the same: your own card’s terms.

So the rule has an envelope, and it is simple to stay inside it:

• If your card charges no foreign transaction fee, or a small one, choose the local currency every time. This is where the rule is safest.
• If your card charges a large fee, one person warns it can wipe out what you save by declining, and one person says that with bad card terms it can be better to accept the machine’s rate, or to get a different card. Check before you rely on the first option: some cards charge their foreign fee on any payment to a business abroad, even one taken in your own currency, and then accepting the machine’s rate means paying both. Some people warn: even a card with no fee still converts at its network’s rate, which is not always the best rate available.
• One person points out that a card converts at the rate on the day the payment settles, not the moment you pay, so the rate can drift a little either way; the same account argues that once the card’s own fees are added, the total can come close to the machine’s offer.
• Some people warn that in some places a bank’s own cash machine can give a better rate than your card network, though they call that the less common case.
• One person warns that in one country, declining the conversion got the payment rejected outright; what to do when a machine gives you no local option, or refuses the decline, is something this page does not cover.
• If an employer is paying you back, check its rules first. One person says some employers reimburse at a fixed or poor exchange rate rather than what your card statement shows, and in that case paying in your own currency can leave you better off.

How to dispute a conversion you did not agree to, and how to spot one on a website before you pay, are also not covered here; your card issuer is the place to ask about a charge you did not choose.

The rest of the trip

Many people say the other half of the job is the card you carry: one with no foreign transaction fee, which they say many banks offer with no annual fee. One person’s combination is a no-fee credit card to pay for things and, for cash, a debit card whose bank refunds cash-machine fees. Two points are worth hearing before you rely on the name of a card: some cards sold as low-fee still charge a foreign transaction fee, so check the terms, and one person says to check whether the fee is flat or a percentage. The first question below covers cash machines, and the second covers exchange desks.

Carry a backup. One person warns that relying only on cards fails in small shops, bars and restaurants in parts of Europe that take cash, and one person says some card networks are welcome in hotels and airports and refused in local shops; one person warns to check that your card’s network is taken where you are going, because some are rarely accepted outside their home country. Some people warn a card with no chip can fail in machines abroad, or be kept by one; if yours has no chip, ask your bank for one before you go. One person warns some countries’ machines want a different number of digits in your PIN, so ask your bank. One person says that in Japan cards are less widely taken and only some cash machines accept foreign cards, some people warn the same of Taiwan, and one says some airports have no cash machine in the arrivals hall. This kind of detail changes as countries move to cards, so research your destination’s machines before you land.

Some people say to tell your bank you are travelling, so a foreign payment is not blocked as fraud. One person warns call more than once, because the first person may not record it, and in one exchange some people say a travel notice is enough while one says cards still get blocked after it. One person adds a quiet protection: keep your travel money in a separate account from your savings, move over only what you need, and keep your receipts, so that if a card is skimmed the damage stays small and you can prove where you were.

And keep it in proportion. One person asked whether paying fees for the convenience of cards abroad is worth it, and the answer given was one trip where all the fees together came to a small fraction of what was spent. Some people say these habits let them travel without paying the bad rates.

Who this is not for

If you are moving a large sum to another country — savings, a house deposit, money for family — this page is not written for you, and the cash-machine tricks do not scale. Some people say specialised money-transfer services or multi-currency bank accounts do better than a standard bank wire, which they say often pads the rate and adds a fixed fee; two say a “no fee” service can hide its cost in a worse rate; and one person says to ask for a quote for the exact amount. Some people add that the rate shown on a website’s front page is the market rate, which you will not actually get. Carrying the cash across a border yourself is not the shortcut it looks like: people warn large sums have to be declared, and undeclared cash can be seized.