Short answer: when a card terminal, ATM or website abroad asks whether you want to pay in your home currency or the local currency, choose the local currency in almost every case. Paying in your home currency activates a service called dynamic currency conversion (DCC), which lets the merchant's or ATM operator's provider set the exchange rate. That rate usually includes a markup of several percent. Choosing the local currency lets your own card network and issuer handle the conversion, which is typically much closer to the market rate. The only regular exception is if your card charges a very high foreign transaction fee, and even then DCC is rarely the better deal.
This guide explains what DCC is, how to recognize it on screens and receipts, how much it tends to cost according to published research, what card network rules and regulations say, and how to cut both DCC and ordinary foreign transaction fees when you travel from or shop outside the United States, the United Kingdom, Canada, Australia or the European Union.
If you want to understand the underlying idea of a "fair" exchange rate first, our guide to the mid-market rate versus bank rates covers it in depth. You can also check live rates for any currency on our exchange rates page.
What dynamic currency conversion is
Normally, when you pay with a card in a foreign currency, the merchant charges you in its own currency. Your card network, such as Visa or Mastercard, converts that amount into your card's billing currency at its daily rate, and your card issuer may add a foreign transaction fee. You see the final amount in your home currency on your statement a few days later.
Dynamic currency conversion changes who does the conversion and when. At the moment you pay, the terminal detects that your card was issued in another country and offers to show and charge the amount in your home currency. If you accept, the merchant's DCC provider converts the price using its own exchange rate, and your card is charged a fixed amount in your home currency. Your issuer sees a transaction in your own currency, so no conversion happens on its side.
The appeal is certainty: you know exactly how many dollars, pounds or other units you will be charged. The catch is that the DCC provider sets the rate, and the merchant often receives a share of the conversion revenue. That creates an incentive to encourage you to accept.
Where you will see it
- Card terminals in shops, restaurants and hotels. The screen or the staff member asks whether you want to pay in, for example, US dollars or euros.
- ATMs abroad. After you enter an amount, the machine offers a "guaranteed" conversion into your home currency, sometimes presenting it as the default or the "safe" option.
- Online checkouts. A foreign website may show prices converted into your currency and charge you in it. Whether that is DCC depends on who does the conversion, but the effect on your cost is similar.
- Hotels and car rental desks. DCC can be applied to deposits, pre-authorizations and final bills, sometimes selected by the staff member unless you say otherwise.
- Airlines and travel booking sites. Some let you pay in your home currency at their own rate instead of the ticket's original currency.
Why it usually costs more
The cost of DCC comes from the exchange rate, not from a visible fee. The rate offered is typically the wholesale rate plus a markup chosen by the DCC provider. Because you see only one number, the final amount in your currency, the markup is easy to miss unless you compare it against a reference rate on the spot.
What the research found
Independent testing has consistently found that DCC is more expensive than letting your card convert. The Norwegian Consumer Council (Forbrukerrådet) tested DCC in 2017 and reported an average markup of 7.6% over the official Visa rate, with a maximum of 12.4%; customers were worse off in 99.7% of the cases it examined. Those figures are summarized in a 2023 peer-reviewed study in the Journal of Public Policy & Marketing by Gerritsen, Lancee and Rigtering, which also found that DCC options specifically harm less financially literate customers.
The European consumer organization BEUC published a position paper on dynamic currency conversion in 2017, raising concerns about poor transparency and consumers paying significant charges without being aware of them. Those concerns fed into the EU's later rules on currency conversion charges, described below.
Travel and card-comparison publications report similar ranges today. Markups of roughly 3% to 7% above the wholesale rate are common, with outliers much higher, especially at ATMs in tourist areas. Compare that with a card that charges no foreign transaction fee, where the cost of paying in local currency is close to the network rate, or with a typical card fee of 1% to 3%.
A simple example
Imagine you are an American paying a €200 restaurant bill in Rome. Suppose the mid-market rate is 1.0850 dollars per euro, so €200 is worth about $217.00.
| Option | How the rate is set | Illustrative charge | Cost vs mid-market |
|---|---|---|---|
| Pay in euros, card with no foreign fee | Card network daily rate | about $217.40 | about 0.2% |
| Pay in euros, card with 3% foreign fee | Network rate + 3% issuer fee | about $223.90 | about 3.2% |
| Accept DCC in dollars | DCC provider rate with a 6% markup | about $230.00 | about 6% |
These numbers are illustrative, but the order is typical. Paying in euros with a no-fee card is cheapest. Paying in euros with a fee-charging card costs more. Accepting DCC is often the most expensive, even when your card has a foreign transaction fee, because DCC markups tend to exceed standard card fees.
What the rules say about DCC
DCC is legal, but card networks and some regulators impose conditions intended to make it a genuine, informed choice.
Card network rules
Mastercard's published merchant guide on DCC requires that if the cardholder does not explicitly choose to be charged in their billing currency, the transaction must be processed in the local currency. The guide says the cardholder must not be asked a "yes/no," "accept/decline" style question, that both currency options must be presented with equal prominence, and that the terminal must not highlight or preselect the DCC option. Merchants must show the amount in both currencies, the exchange rate used, and any commission, fee or markup over the wholesale or government-mandated rate. You can read the Mastercard DCC guide directly.
Visa's consumer guidance sets out similar expectations: merchants and ATMs should show the amount in both currencies, the exchange rate and any markup, should give you a choice, and must not choose on your behalf. Visa also notes that accepting or declining conversion does not affect your ability to make purchases or withdraw cash abroad, and suggests reporting pressure or missing information to your card issuer.
European Union
Regulation (EU) 2019/518 requires parties offering currency conversion at an ATM or point of sale to disclose their charges clearly, and requires currency conversion charges on card payments to be expressed as a percentage markup over the latest available euro reference rates from the European Central Bank. In practice, this means DCC offers within the EU should tell you, before you confirm, how many percent above the ECB reference rate you are paying. That percentage is exactly the number you need to make a sensible decision.
United States, United Kingdom, Canada and Australia
Outside the EU there is generally no specific law that sets a DCC markup format, but card network rules still apply to merchants that accept Visa and Mastercard wherever they are, and general consumer protection and misleading-pricing laws apply in each country. If you believe you were charged in your home currency without being given a real choice, contact your card issuer. Depending on the circumstances and the issuer's dispute process, you may be able to challenge the conversion.
How to recognize DCC before you agree to it
DCC is not always labeled clearly. These are the signs to watch for.
On a card terminal
- The screen shows two amounts, one in the local currency and one in your home currency, and asks you to pick.
- The screen displays your home currency amount with phrases like "guaranteed rate," "no hidden fees," or "pay in your currency."
- The staff member turns the terminal and says something like "Dollars or euros?" or presses a button before handing it to you.
- The receipt shows an exchange rate, a markup percentage and a total in your home currency.
At an ATM
- After you enter the amount, the machine offers a conversion "with" or "without" a guaranteed rate, or asks you to "accept" a conversion.
- The screen shows the amount you will be charged in your home currency, often with a large green "Accept" button.
- Declining is presented as the risky choice, for example with wording that your bank may charge "unknown" fees.
At ATMs, the correct choice is usually the one labeled "without conversion," "decline," or "continue in local currency." The wording is designed to feel counterintuitive, so read carefully.
Online
- A checkout page shows prices in your currency even though the shop is abroad, and there is small print mentioning an exchange rate or conversion service.
- A travel booking site offers to "lock in" the price in your currency for a fee or at a stated rate.
- Your card statement shows the transaction in your home currency with no foreign transaction fee, even though the merchant is abroad. That can indicate the merchant converted it.
When DCC is not worse (and how rare that is)
It is fair to ask whether DCC is ever the better option. In principle, it could be if your card charges a high foreign transaction fee and the DCC markup is unusually low. For example, if your card charges 3% on foreign transactions and a particular DCC provider's total markup is 2%, DCC would be cheaper on that one transaction.
In practice this situation is uncommon, for three reasons. First, published testing shows DCC markups typically exceed standard card fees. Second, you usually cannot see the markup clearly enough in the moment to be sure, unless you are in the EU where the percentage must be disclosed. Third, the better fix is to change the card you travel with, which removes the dilemma altogether.
If you do find yourself comparing, here is a quick method. Look up the mid-market rate on your phone, multiply the local-currency amount by it, and compare the result with the DCC amount. If the DCC amount is higher by more than your card's foreign transaction fee, decline it.
Foreign transaction fees: the other half of the problem
Declining DCC protects you from one hidden cost. The other is your own card's foreign transaction fee, sometimes called a non-sterling transaction fee in the UK or a foreign currency conversion fee elsewhere. This fee is charged by your card issuer on top of the network's conversion rate.
Typical fees by country
| Country | Common range on standard cards | Notes |
|---|---|---|
| United States | about 1% to 3% | Many travel credit cards charge no foreign transaction fee. |
| United Kingdom | about 2.75% to 2.99% | Some debit cards add a fixed charge per transaction; specialist cards may charge nothing. |
| Canada | about 2.5% | A smaller number of cards waive the fee. |
| Australia | often around 3% | Some cards and travel money products advertise no foreign fees; check the exchange rate they use. |
| Euro area | varies by bank | Card payments in euros within the euro area are not foreign-currency transactions; outside the euro area, EU rules require the markup to be disclosed. |
These are broad ranges drawn from consumer guides such as MoneySavingExpert in the UK and NerdWallet Canada. Your own card's terms are the only reliable source for your fee, so check them before you travel.
Cash withdrawals cost more
Withdrawing cash abroad can involve several charges at once: your issuer's foreign transaction fee, a cash withdrawal fee, the ATM operator's own fee, and, on credit cards, interest from the day of withdrawal because cash advances rarely have a grace period. That is why using a credit card at a foreign ATM is usually a poor choice. A debit card or travel card with low foreign fees is generally better for cash, and you should still decline the ATM's conversion offer.
How to pay abroad without overpaying: a practical plan
Before you travel
- Check your cards' foreign fees. Look up the foreign transaction fee, cash withdrawal fee and any per-transaction charge on each card you plan to take.
- Get a low-fee card if you travel regularly. Many banks, credit card issuers and digital banks offer cards without foreign transaction fees. Compare exchange rates as well as fees; a "no fee" card still uses a rate.
- Carry two cards on different networks. If one is declined or lost, you have a backup. Keep them separately.
- Tell your bank if required. Some issuers still ask you to register travel plans or use their app to manage security settings for foreign use.
- Know the approximate rate. Memorize a rough conversion, such as "1 euro is about 1.08 dollars," so you can sanity-check prices and DCC offers. Our currency converter is useful for this.
At the till
- Say the local currency first. Before the staff member touches the terminal, say "In euros, please" or the equivalent. It prevents them from choosing for you.
- Read the screen. If it shows two amounts, select the one in the local currency.
- Check the receipt. If it shows an exchange rate and an amount in your home currency when you asked for local currency, ask for the transaction to be voided and redone. It is much easier to fix on the spot than later.
- Keep the receipt. If you need to dispute a conversion with your issuer, the receipt is your evidence.
At the ATM
- Prefer bank-owned ATMs. ATMs operated by local banks are often cheaper than independent machines in tourist areas.
- Decline conversion. Choose "without conversion" or "continue in local currency."
- Look for operator fees. Some machines charge a flat fee regardless of your choice. Withdrawing a larger amount less often can reduce the impact of flat fees, balanced against the risk of carrying cash.
- Cancel if unsure. If the screen is confusing or you feel pushed, cancel the transaction and use another machine.
Online
- Look for a currency selector. If a foreign shop lets you choose, pick the shop's local currency when your card has low foreign fees.
- Compare with the mid-market rate. If the site shows prices in your currency, convert the original-currency price yourself and compare.
- Watch out at payment gateways. Some payment providers show a conversion step at checkout. Read it before confirming.
What happens behind the scenes when you pay in local currency
Understanding the normal conversion path makes it easier to see why declining DCC works in your favor, and why your statement might still look slightly different from what you expected.
When you pay in the local currency, the merchant's bank sends the transaction through the card network in that currency. The network converts it into your card's billing currency using the rate it applies for that processing day. Visa and Mastercard each publish tools that let you look up the rate they applied for a particular date and currency pair, which is useful if you want to check a statement. Your card issuer then posts the converted amount to your account and, if your card has one, adds its foreign transaction fee, either as part of the same line or as a separate entry.
There is often a short delay between the moment you pay and the moment the transaction is processed and converted. In your banking app you might first see a "pending" amount based on an estimated rate, and then a slightly different "posted" amount a day or two later. That difference reflects the network rate on the processing day and is normally small for major currencies. It is not a sign that you were charged incorrectly, although it is always worth checking unusually large differences.
With DCC, by contrast, the conversion happens at the terminal before the transaction reaches the network. The amount is already in your currency, so the network and your issuer simply pass it through. The rate you were given at the till is locked in, which is why DCC is marketed as "certainty." The price of that certainty is the markup inside the rate.
How to choose a card for travel and foreign spending
The single most effective way to cut the cost of spending abroad is to use the right card. When you compare options, look beyond the headline "no foreign fees" claim.
What to compare
- Foreign transaction fee. Zero is ideal. Anything around 3% adds up quickly over a trip.
- Exchange rate used. Most cards use the network's rate, but some prepaid and travel money products use their own rate or lock a rate when you load money. Compare the rate, not just the fee.
- Cash withdrawal fees. Check the fee per withdrawal, any free monthly allowance, and whether interest applies from the day you withdraw.
- Per-transaction charges. Some debit cards charge a small fixed amount on every foreign purchase, which matters if you make many small payments such as coffees and transport tickets.
- Weekend markups. Some app-based providers add a small extra margin when currency markets are closed. Check their fee pages.
- Acceptance. Visa and Mastercard are the most widely accepted worldwide. Other networks can be less accepted in some countries.
- Security features. Instant card freezing, spending notifications and virtual cards all help if something goes wrong abroad.
Credit or debit?
Credit cards and debit cards can both work well for travel, but they offer different protections. In the United Kingdom, purchases on a credit card between £100 and £30,000 can benefit from Section 75 of the Consumer Credit Act 1974, which can make the card provider jointly liable with the merchant if something goes wrong. Card networks also run chargeback schemes that apply to both debit and credit cards, although these are network rules rather than legal rights. In the United States, federal law generally gives credit card users stronger protections against fraud and billing errors than debit card users. For large travel bookings such as flights, hotels and car hire, many people prefer a credit card for these reasons, as long as they pay the balance in full to avoid interest.
Preloaded travel money cards
Travel money cards let you load one or more foreign currencies before you go. If you pay in a currency you have already loaded, no conversion happens at the till, which removes both DCC and the card's conversion at that moment. The trade-off is that you converted when you loaded the card, at whatever rate the provider offered then. Some cards also charge fees for loading, for inactivity, for ATM withdrawals or for closing the card and taking back unused funds. Check the full fee schedule and compare the loading rate with the mid-market rate on our exchange rates page.
Business travel and expense reports
If you travel for work, DCC can create a small administrative headache as well as a cost. Company expense systems often expect receipts in the local currency and convert them using a standard rate. A receipt already converted at a DCC rate can make it harder to reconcile the claim, and some employers only reimburse the local-currency amount at their standard rate, leaving you to absorb the DCC markup.
Paying in the local currency keeps receipts clean and consistent. If you use a company card, check your employer's travel policy; many explicitly instruct employees to decline dynamic currency conversion for exactly these reasons. If you use a personal card and claim expenses afterwards, your card statement plus the local-currency receipt usually makes the reimbursement straightforward.
Useful phrases for asking to pay in local currency
A short phrase said before the terminal is handed to you prevents most unwanted conversions. Here are simple versions for popular destinations.
| Language | Phrase | Meaning |
|---|---|---|
| French | En euros, s'il vous plaît. | In euros, please. |
| Spanish | En euros, por favor. | In euros, please. |
| Italian | In euro, per favore. | In euros, please. |
| German | In Euro, bitte. | In euros, please. |
| Portuguese | Em euros, por favor. | In euros, please. |
| Any language | Local currency, please. | Widely understood in tourist areas. |
Outside the euro area, simply replace "euros" with the local currency, such as pounds, francs, kronor or koruna. Staff in busy tourist areas hear these requests constantly, and asking politely and early is usually enough.
Hotels, car rentals and deposits
Hotels and rental companies often take a pre-authorization or deposit at check-in and charge the final bill later. DCC can be applied at either stage, and sometimes staff select it automatically. When you check in, say clearly that all charges should be in the local currency. Check the final invoice and card slip before signing.
Refunds deserve special attention. If a deposit is converted with DCC and then refunded, the refund may be converted back at a different rate, potentially leaving you short. Keeping everything in the local currency avoids that double conversion. The same logic applies to returning goods bought abroad.
Travel scenarios by country
Americans in Europe
DCC offers are common in European tourist areas, at airports and at independent ATMs. With a card that charges no foreign transaction fee, choosing euros (or the local currency outside the euro area, such as pounds in the UK, Swiss francs in Switzerland or koruna in the Czech Republic) is the clear winner. Because EU rules require DCC providers in the EU to express their charge as a percentage over the ECB reference rate, you should see that percentage on screen or on a sign; if you do not, treat that as a red flag.
Britons in the United States, Europe and beyond
Many UK high street debit cards charge around 2.99% on non-sterling spending, sometimes plus a fixed amount per purchase. That makes some travelers think DCC will be no worse. In most cases it is still worse, and the better step is to travel with a card that charges no non-sterling fee. Plenty of UK providers offer one.
Canadians in the United States
Cross-border shopping and travel to the US is extremely common, and US merchants near the border sometimes offer to charge in Canadian dollars. Compare that offer with your card's 2.5% fee plus the network rate. A card with no foreign transaction fee, or a US-dollar account and card, can remove the cost altogether for frequent visitors.
Australians in Asia and Europe
Australian travelers often encounter DCC in Southeast Asia and Europe. Some travel money cards preload foreign currencies at a rate set when you load them; if you pay from a preloaded currency balance, no conversion happens at the till, as long as you pay in that currency. If the card has to convert, check the rate it uses. The ACCC's consumer guidance recommends comparing total cost and the amount you actually get rather than advertised fees.
Europeans outside the euro area
For euro-area cardholders traveling to the UK, the US or elsewhere, their own bank must disclose its currency conversion markup relative to the ECB reference rate. That makes it straightforward to compare the bank's markup with a DCC offer on the spot. In most cases, the bank's conversion will still be cheaper.
What to do if DCC was applied without your consent
Sometimes you only discover afterwards that you were charged in your home currency. Here is how to handle it.
- Check the receipt and statement. Look for an exchange rate, a markup, or a transaction amount in your home currency from a foreign merchant.
- Contact the merchant first if practical. Some merchants will reverse and redo the transaction in local currency.
- Contact your card issuer. Explain that you were not offered a genuine choice, or that the option was selected for you. Provide receipts and any photos. Issuers handle disputes under network rules, and the outcome depends on the facts and the rules that apply.
- Act promptly. Dispute windows are limited, so raise the issue as soon as you notice it.
- Report persistent problems. In the EU and UK, national consumer bodies and regulators collect complaints about misleading payment practices; in Australia, the ACCC does; in the US, the CFPB accepts complaints about financial products.
Subscriptions and recurring foreign payments
Foreign currency costs are not only a travel problem. Many people pay for software, streaming, cloud storage, online courses or marketplace fees billed by companies in another country. Each of those charges can carry a foreign transaction fee, and some are converted by the merchant rather than by your card, which works much like DCC.
Look at your last few card statements for recurring charges from foreign merchants. For each one, check three things. First, which currency the service actually bills in; sometimes you can switch your account to your local currency, or to the service's home currency, in the billing settings. Second, whether your card adds a foreign transaction fee to that charge, which is often shown as a separate small line. Third, whether the merchant converts the price for you at its own rate, which you can test by comparing the charged amount with the listed foreign price at the mid-market rate on the billing date.
A few percent on a monthly subscription looks trivial, but across several services over a year it becomes real money. Moving recurring foreign charges to a card with no foreign transaction fee, or billing them in your own currency when the merchant sets a fair local price, is a quick win that takes one afternoon. Freelancers and small businesses that pay for international tools can also consider holding a balance in the billing currency, so that each monthly charge is paid without any conversion at all.
Common myths about paying abroad
"Paying in my currency protects me from exchange rate changes"
It fixes the amount at the moment of payment, but the "protection" is expensive. Card networks typically convert within a day or two, so the rate risk you avoid is small. The DCC markup you pay for that certainty is usually much larger than any movement you would have experienced.
"The local currency option will add unknown bank fees"
Your bank's fees are not unknown; they are in your card terms. If your card charges no foreign transaction fee, paying in local currency costs you close to the network rate. ATMs sometimes imply otherwise to encourage you to accept their conversion.
"DCC is a scam"
DCC is a legitimate service that some travelers value for certainty or budgeting. The problem is how it is presented and how much it typically costs, not its existence. If you understand the price and choose it anyway, that is your decision. The rules exist to make sure it is a real decision.
"Contactless payments cannot trigger DCC"
DCC can be offered on contactless payments too, although the screen may move quickly. If you are not sure what you were charged, check the receipt or your banking app immediately.
Checklist: paying abroad the cheap way
| Step | What to do |
|---|---|
| Card choice | Travel with a card that has no or low foreign transaction fees, plus a backup on a different network. |
| Currency choice | Always choose the local currency on terminals, ATMs and foreign websites. |
| Say it first | Tell staff "local currency, please" before they operate the terminal. |
| Check receipts | Look for an exchange rate or home-currency total you did not ask for, and fix it on the spot. |
| ATMs | Use bank-owned machines, decline conversion, avoid credit cards for cash. |
| Rate check | Keep a rough conversion in mind and use a converter for big purchases. |
| Disputes | Keep receipts and contact your issuer quickly if DCC was applied without consent. |
Frequently asked questions
Should I pay in local currency or my home currency abroad?
Local currency, in almost every case. Paying in your home currency activates dynamic currency conversion, which usually uses a worse exchange rate than your card network.
Is dynamic currency conversion illegal?
No. It is legal, but card network rules require merchants to offer a real choice and show the rate and markup, and EU rules require the charge to be disclosed as a percentage over the ECB reference rate.
What does "without conversion" mean at an ATM?
It means the ATM will not convert the amount itself; your card issuer and network will convert it instead. That is usually the cheaper option.
Can I get a refund if DCC was forced on me?
You can ask the merchant to redo the transaction and contact your card issuer to dispute it. The outcome depends on the evidence and the rules that apply, so keep receipts and act quickly.
Does DCC apply to online purchases?
Similar conversion offers appear online, where a foreign merchant or payment provider converts the price into your currency. Compare the converted price with the mid-market rate before accepting.
Is it better to use cash or a card abroad?
For most purchases, a low-fee card paid in local currency is cheaper and safer. Carry a modest amount of local cash for places that do not take cards, and withdraw it from bank-owned ATMs while declining conversion.
Why did my card statement show a different amount than the receipt?
If you paid in local currency, your card network converted it at its daily rate, possibly on a different day, and your issuer may have added a foreign transaction fee. If you paid in your home currency, the receipt amount should match your statement.
The bottom line
When a machine or a merchant abroad offers to charge you in your own currency, it is offering a service with a price tag hidden in the exchange rate. Research and testing consistently show that price is higher than letting your card convert. Choose the local currency, travel with a card that has low or no foreign transaction fees, and check your receipts. Those three habits remove most of the extra cost of spending abroad.
Before your next trip, bookmark our currency converter so you can check any offer in seconds, and keep an eye on how your destination's currency is moving on the market movers page.
Sources
- Visa – Decoding dynamic currency conversion
- Mastercard – Dynamic Currency Conversion guide (merchant version)
- Regulation (EU) 2019/518 on cross-border payments and currency conversion charges
- Gerritsen, Lancee & Rigtering (2023), "Dynamic Currency Conversion Payment Options Specifically Harm Less Financially Literate Customers," Journal of Public Policy & Marketing
- BEUC – Dynamic currency conversion position paper (2017)
- ACCC – Foreign currency and money exchange
- MoneySavingExpert – Travel credit and debit cards
- NerdWallet Canada – No foreign transaction fee credit cards explained
Reviewed: September 28, 2026. This article is for general information only and is not financial advice. Card terms, fees and rules change; always check your own card's current terms.