UK tourists have been warned that a simple card mistake could cost them significantly more during their summer holidays abroad. Martin Lewis, the financial expert known for his appearances on BBC and ITV, highlighted the issue in a clip from his podcast shared on TikTok.
The Problem: Dynamic Currency Conversion
When using a credit or debit card abroad, travellers are often asked whether they want to pay in pounds or the local currency. Mr Lewis explained that the correct choice is always the local currency, such as euros, dollars, or dong. He stated: "The correct answer is you should always pay in euros, or whatever the local currency is, because that means it's your plastic that's doing the exchange rate conversion, not the overseas shop or ATM."
This practice is known as dynamic currency conversion, where the machine offers to convert your purchase into pounds immediately. While it may seem convenient, it often includes a weaker exchange rate and hidden fees. By choosing the local currency, your own bank or card provider handles the conversion, which is typically more favourable even after standard charges.
Expert Advice
Mr Lewis emphasised that even standard UK cards usually offer better rates than overseas ATMs or shops. He said: "Even a bog-standard UK credit or debit card… is beating most overseas ATMs or shops' exchange rates."
A spokesperson for travel experts Ski Vertigo added: "This is a mistake many travellers make without realising. The option to pay in pounds can seem like the easier or more familiar choice, but it often comes with a less favourable exchange rate and extra charges built in."
Tourists are advised to always select the local currency when prompted abroad to avoid unnecessary costs and ensure they get the best possible deal on their transactions.
