Should I pay in local or home currency when I’m abroad? The best way to spend money on holiday, explained
Most of of us likely have been in this position: abroad and contemplating whether to use local currency or our home currency.
With many cards now offering overseas transaction, travellers have the choice between using their cards or getting out cash to pay for things. But which is better?
According to HSBC, research shows that in most cases you can save by opting to spend in the local currency, so that would mean choosing euros in Spain, for example, or dollars in the US.
When you choose to pay in the currency of the region or country you’re visiting, Visa or Mastercard will set the exchange rate. Your bank may also charge a fee to carry out the transaction.
The rate used by your card provider when paying in local currency will in most cases be lower than that of the merchant, or foreign bank, when paying in sterling.
Sam Richardson, Which? money deputy editor, said: “If you’re withdrawing foreign cash or paying for items in shops and restaurants, it’s almost always best to pay in the local currency – not in pound sterling – when prompted.
“Choosing to convert to sterling will mean that the merchant or ATM sets the conversion rate instead of your bank. This typically means that you’ll get an unfavourable exchange rate and, in some cases, you’ll have to pay both your bank and the ATM operator a fee.
“Before you jet off, it’s also well worth checking what your card provider charges on foreign transactions to see if you might be better off shopping around for a specialist travel card that doesn’t charge any extra fees for withdrawing cash or using your card abroad.”
Some retailers outside the UK might automatically assume you want to pay in pounds unless you say otherwise, so always double check the amount before paying.
