There are few things more exciting than an international trip. Paying for meals, goods, rides and shopping abroad however, is a different story. We’re moving towards a cashless society, and the more we rely on paying with plastic, the more variables come into play with each purchase. If you want to save at least a few bucks/pounds/yen/euros on every purchase you make, don’t fall for this one common trick…

Would You Like To Pay In Local Currency, Or Your Home Currency?

If you have a card that doesn’t charge foreign transaction fees: choose to pay in local currency, EVERY time. Don’t pay in home currency- unless you’re in your home country. Why? Dynamic Currency Conversion. This is jargon for: charging you more money. When you choose to pay in your home currency versus the local currency where you are, the payment is processed using an inflated rate of exchange, rather than the bank rate- allowing the payment processor to make more money (for nothing) by taking more money from you. Not good!

We highly recommend using a card that does not charge foreign transaction fees for any foreign transactions. If your card does charge foreign transaction fees, you need to see whether it’s cheaper to pay in home currency or pay the foreign fee. More on that below.

The Difference Can Be As High as 10% Per Transaction…

Buying a pint in England isn’t going to make you feel the burn for choosing the wrong currency. Paying for hotels, meals, shopping and other purchases that can run over $100 certainly will though! A $1000 hotel stay paid for in the wrong (foreign) currency could cost you an extra $100 in inflated currency transactions, versus just choosing to pay in local currency. By paying in local currency, your bank will use the actual rate of exchange, which is closest to “fair”.

What If My Card Does Charge A Fee For Foreign Transactions?

If your card DOES charge a foreign transaction fee, which can be as high as 3%, it can still be worth paying in local currency. You’ll unfortunately need to pull out your phone and do some quick math. Let’s say you get the option to pay in your home currency of dollars and are offered $140, versus paying £95 in local currency in the UK. Even with a 3% fee, £95 comes to $130 MAX. So if you took the $140 option to pay in your home currency, you’d still be taking a loss. And on top of that, although some cards don’t charge a foreign transaction fee if paid in local currency, many will- just because the biller’s address is outside of the country. Double stuffed! The only way to figure it out is to do the math. Again, just don’t use a card that charges foreign transaction fees, to keep things simple.

This Is The Same Worldwide. So, Always Choose Local.

Hey it’s your money- but handing companies 10% of every transaction you make is just foolish. Pay in local currency, pay with a card that doesn’t charge foreign transaction fees and you’ll be maximizing every purchase abroad. Of course if you are using a card that earns points, airline miles or hotel points, that certainly doesn’t hurt either. Just don’t pay in your home currency while abroad, ever. No matter how charming and tempting the person makes it sound…