Should I pay in local currency?

Frank is about to head to Europe for the first time and he wants to know if it’s better to pay bills with local currency or have it converted so he knows how much he’s spending. In Travel SOS, Leon shares a tip that could save Frank a heap of cash on his holiday.


Q. Frank
I’m about to go to Europe for a four-week holiday and I’m only taking a credit card and just a little bit of cash for other costs. I just wondered, is it better to ask for conversions when I pay my bills or should I just pay in local currency and hope I have it covered? I only ask because I like to know how much in Australian dollars I am spending.

A. Good question – and the answer could save you heaps of money on your holiday. Whether paying for accommodation, restaurant bills or bar tabs, you’ll sometimes be asked if you want the bill converted to your home currency. It’s called a Dynamic Currency Conversion and it lets you know how much you’re spending in more familiar tender.

You may also notice an onscreen message asking if you want your account debited in your home currency when you withdraw money from a foreign ATM.

And while it’s nice to know how much you’re spending in your home currency, every time you do a currency conversion, you’ll pay a fee. So, it’s always better to pay in the local currency.

Also, on top of the one to three per cent conversion fee, the exchange rate being offered to you will most likely be unfavourable. And then consider the foreign transaction fees from your credit card company and you can watch your travel dollars dwindle before your eyes.

Even credit cards with no foreign transaction fees won’t prevent the fee incurred when you ask for the conversion.

So, it’s best to press ‘No’ on the conversion, or politely decline to whomever asks you if you’d like this ‘service’.

If you need to keep track of your travel costs, try using – it’s always up-to-date and, with the aid of a calculator on your phone, you should be able to keep a running tally easily enough.

Otherwise, you could try an app called Trail Wallet – it’s a goody for tracking travel costs.

Hope that helps.

If you have a Travel SOS question, email it to [email protected] and we’ll do our best to answer it!

Related articles:
Seven travel money wasters
Choosing the right currency
Managing your travel money

Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.


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