Always choose the local currency

The single most expensive button in travel, pressed by people being helpful.

You are paying for something abroad. The card terminal, or the ATM, offers you a choice: pay in the local currency, or pay in your own. Paying in your own looks friendlier — you can see exactly what it costs, in money you understand.

It is almost always the worse option, and often by several percent.

What is actually happening

This is called dynamic currency conversion, or DCC. When you accept, the conversion is performed by the terminal operator or the merchant's payment processor rather than by your own bank or card network. They choose the exchange rate, and they choose it in their favour.

Typical markups sit somewhere around 3% to 7% over the rate your card network would have used, and the fee is folded into the rate rather than shown as a separate charge — which is precisely why it works.

Why the offer looks like a favour

Because it is framed as certainty. "Pay in GBP: £42.10" removes the small anxiety of not knowing what you spent. That anxiety is worth much less than the markup, but it is the thing you feel in the moment, with a queue behind you.

Merchants are often incentivised to offer it, and staff frequently do not know the difference. Nobody in the transaction is trying to deceive you personally.

What to do

• Always choose the local currency. Baht in Thailand, yen in Japan, euros in Spain. Your card network converts at a rate close to mid-market.
• Watch for pre-selection. Some terminals default to your home currency, and some ask in a way that makes the local option look like the awkward choice.
• The same applies at ATMs. Decline the "conversion" and let your bank do it.
• Check the receipt. If it shows your home currency and a rate, DCC was applied. Some banks will reverse it if it was applied without you being asked.

The one case for saying yes

If your own card charges a large foreign transaction fee — some do, around 3% — the gap narrows, and if the DCC rate happened to be good it could theoretically break even. In practice it rarely is. The better fix is a card that does not charge the fee.