Should I Choose Local Currency Or Home Currency When Using My Card Abroad?

If you’ve ever purchased something abroad using your credit/debit card, you’ve probably been offered the option to pay in your home or local currency. For example, if you are based in the UK with a GBP card and visit Germany you may be offered the choice between paying in Euros or Pounds for your purchase. This is also true when withdrawing money from an ATM, with it promising that you are ‘locking in a rate’ to ‘avoid currency fluctuations.’ But what one should you choose when using your card abroad?

Use a specialist product abroad

There are cards that are designed to be used abroad that offer you the actual market rate with no FX fee. MoneySavingExpert cover a range of credit/debit cards for this purpose here – https://www.moneysavingexpert.com/credit-cards/travel-credit-cards/

ALWAYS choose the local currency when using your card abroad

Yes, it might be easier to pay in your home currency so you know exactly how much you are spending BUT you will be getting a much worse deal! The merchant/ATM owner calculates their OWN exchange rate for converting local currency to your home currency. That means it will be FAR worse than the market exchange rate after all, the merchant/ATM owner wants their own cut too! They can set whatever rate they want to and then the difference between their rate and the market rate they get to keep. For example, the current exchange rate is roughly 1GBP to 1.17EUR but if you wanted to pay in your home currency is likely you’d see a rate of 1GBP to 1EUR… ouch!

What if I’ve been automatically charged in my home currency using my card abroad?

If you’ve been given the card machine and it already shows your local currency insist on cancelling the transaction as you want to pay in local currency. Nobody should be making the choice of home or local currency for you so stick to your guns if challenged. Your wallet will certainly thank you for doing so!

Have you ever fallen victim to this practice?