Should you pay in local currency when abroad
When you pay for something abroad on your card, you usually have the option to do so in your home currency or the local currency. But which do you choose?
Here we look at the difference between the two, any fees included and what we mean by dynamic currency conversion.
What do local currency and home currency mean?
If you’re on holiday abroad and you take cash out of the ATM or pay on your card, you’ll likely be given the choice of paying in your home currency or the local currency.
Paying in the local currency means paying in the currency they use in that country, say for example euros in Spain or Italy.
Paying in your home currency means paying in pounds. If you choose this option, something called dynamic currency conversion will happen, which is where the local currency is converted to pounds at the point of sale.
What is dynamic currency conversion?
With dynamic currency conversion (DCC), it means that if you choose to pay in pounds (your home currency) rather than the local currency, the amount is then converted from the local currency to pounds. This happens if you pay on your card in pounds or select to pay in pounds when you withdraw local currency from an ATM.
There are often extra fees to pay, and the exchange rate is set by the retailer or their bank.
Is it better to pay in the local currency?
It depends. If you choose home currency, you’ll have to pay the retailer’s exchange rate or the one set by local bank when using the ATM. This could be worse than the exchange rate offered by your card provider when you choose to pay in the local currency, but not always.
Paying in sterling when abroad
If you pay in sterling when on holiday it might seem simpler as it’s a currency that you’re familiar with, but you will have to pay the exchange rate set by the retailer or local bank. Before you choose to pay in pounds, you should be shown:
- The amount in both currencies
- The exchange rate being used
- Any extra fees
You should see this displayed on the cash machine, as well as on receipts in shops and restaurants so you can choose if it’s the right option for you.
Paying in local currency when abroad
When you pay in the local currency, the exchange rate will be set by your card provider – Visa or Mastercard – rather than the retailer or local bank.
What are the fees for using your credit or debit card overseas?
If you use your credit or debit card to pay for things overseas, you’ll usually pay the following fees:
- Non-sterling transaction fee: Also known as a foreign transaction fee, this applies when you pay for something on your card or withdraw cash. It’s charged by your card provider. Often this will be between 2.75% and 2.99% of the value of the transaction.
- Cash advance fee: If you withdraw money from an ATM in a foreign country, you’ll pay a cash advance fee. It’s usually between 2% and 3% and is charged on top of the transaction fee. So, if you use an ATM, you might be charged twice.
- Interest charges: If you use your credit card to pay for things on holiday, you’ll pay interest in the same way as you do at home. The difference comes if you use your credit card to withdraw money from the ATM. The interest rates will likely be higher than a direct purchase and it will apply from the date of withdrawal even if you pay off your balance in full that month.
What is a pre-paid currency card?
A pre-paid currency card – like our Asda Travel Money Card – allows you to pre-load the card with your chosen currency and then use it to pay for things on holiday or take money out of the ATM. You can only spend what you load onto the card, and it’s not connected to your bank account which makes it a secure option. You don’t pay fees either.
- Load up to 15 currencies
- Use contactless worldwide
- Free cash withdrawals from ATMs
- No fees when you spend in a currency that’s pre-loaded to the card
- Easy to top up whilst abroad
Find out more about the Asda Travel Money card.
Local currency FAQs
- Do I get charged for using my debit card abroad?
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Yes, if you use your debit card abroad you will usually be charged. You’ll pay a foreign transaction fee (typically between 2.75% and 2.99%) of the value of the transaction. If you use your card to withdraw from an ATM, you’ll pay both a foreign transaction fee and a cash advance fee (between 2% and 3%).
- Is it cheaper to use a credit card or cash abroad?
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It’s usually cheaper to pay with cash when you’re abroad. If you exchange your currency in advance, you’ll likely get a more competitive exchange rate than paying on your debit card. And you won’t be charged a foreign transaction fee either. Just remember if you don’t have foreign currency with you already and you withdraw from an ATM, you’re likely to pay both a foreign transaction fee and a cash advance fee.
The Asda Rewards price for Asda Travel Money will be preferential compared to the standard rate advertised at your chosen place of purchase (being either online via https://money.asda.com/travel/travel-money/ (Website) or in-store at an Asda Travel Money bureau) on the date of purchase. Asda Rewards prices are only available on the sell rates of currencies in stock on the date of your purchase. When purchasing online, you must enter a valid Asda Rewards number found in the Asda Rewards App or Website to obtain the Asda Rewards price rate. When purchasing in-store, you must show the Asda Rewards barcode found in the app. Asda Rewards pricing available for Asda Travel Money purchases only offers you a more preferential exchange rate, you will not receive or be entitled to any Asda Rewards on your purchase. We reserve the right to withdraw this offer at any time and without prior notice.
Please note that Asda Travel Money Online Services Terms and Conditions are available at https://travelmoney.asda.com/asda/page/termsandconditions.
Asda Travel Money is provided by Travelex Agency Services Limited, registered number: 04621879. Registered Office: Worldwide House, Thorpewood, Peterborough, PE3 6SB