Travel Tip - Pay In Local Currency

Here is a quick travel tip that I was reminded of on my trip to France last week. If you are in a foreign country, they often are going to require you to pay in the local currency. There should be no issue with this if you’ve been grabbing some good credit cards. Many travel cards have no foreign transaction fees (can’t say as much about my debit card though). Having a card with no foreign transaction fee is a key thing for the frequent or even yearly traveler. Transaction fees can add up quick when abroad, and adding a fee to every transaction isn’t something you want to see on your bill… spending money to use your money is hardly a card you want to keep around.

Here’s the one thing you have to be on the lookout for though. When traveling through airports mostly and some more popular stores in the city, there are little tricks the vendor will try to play on travelers. A big one is the offering to use your home currency to make a payment. This is almost always triggers some little gut reaction in my head that says… yes, home currency is the best! In other words, the credit card machine will offer for you to pay in US Dollars instead of British Pounds. Do not fall for this!!!!

Why am I so adamant about this? Well, it’s a rip off, point blank. The reasons that this is offered at a point of sale machine is that the conversion rate always has a percentage fee added on to the transaction. As an example, I was stopping for a falafel and hummus wrap in London Heathrow (Café Nero rocks the vegan option with this gem). When I stepped up to pay, the familiar request popped up on the screen offering to pay in American Dollars. My little gut reaction kicked in, some weird desire to always pay in my home currency. Luckily I have experience with this and know better than to accept this. I chose to pay in British Pounds, after all I have no foreign transaction fees, the credit card issuer will automatically convert to USD with no fee at all, and at the current market rate for currency transfers.

Know that I’ve been told to avoid this, I noted in my head what the currency exchange rate was listed on the credit card terminal. The listed exchange rate was something on the order of 1.65 USD to 1 GBP. Now if you go look the exchange rate up, it is and was around 1.55 USD to 1 GBP. So in this case, the company was willing to do the conversion for you at an expense of 10 cents per pound spent, roughly 6.5% fee that I didn’t need to pay since my card converts for free. This can get expensive fast, especially considering how strong the British Pound has been for a long time.

So the next time you are flying thorugh or visiting another country, keep in mind that you want a foreign transaction fee free card, and never pay in anything accept for the local currency. This applies to those currency exchange places as well, they charge the same kind of fee… do not fall for these traps.