Should you pay in the local currency or pounds when you're on holiday?
Updated:
The summer holidays are right around the corner. You might have been able to get a cut price deal for a week in the sun and picked out the best card to avoid hefty fees.
But when you're handed a card machine on holiday, should you pay in pounds or the local currency?
Depending on which you pick, it could lead to a much more expensive holiday.
Growing numbers of banks are offering no fees to travellers, making it easier than ever to spend while abroad.
And while it's likely most do still take some physical money, the majority of major holiday spots accept card payments and contactless.
It means you can spend like normal and avoid queuing to get your cash converted into the local currency.
But with that comes the issue of whether to pay in the local currency or in pounds. Most restaurants, shops and cash machines give tourists the option to spend in pounds, which is known as dynamic currency conversion.
Free spending: More banks are no longer charging fees when customers go abroad
Some travellers choose this option so they know how much the transaction will cost.
But the correct answer is always to choose the currency of the country you're in - so euros if you're in the Eurozone, dollars in the US and so on.
This is because the conversion rates used by foreign firms are always more expensive than if your bank or credit card provider converts the cost.
Most UK banks use the exchange rate offered by Visa or Mastercard, which is as close to the best rate as you can get.
This also applies to withdrawing cash from a foreign ATM as well.
While the difference between the two figures is unlikely to diverge too much, paying a few a little more will add up over the course of your holiday.
You'll also need to check whether your bank is charging you any other fees, which can rack up over the course of your holiday.
Plenty of high street banks have moved away from charging customers for transitions and withdrawals, but you may have to sign up for a paid monthly account.
For example, Natwest, Nationwide and Lloyds offer free spending for customers of their paid accounts.
Others, like Monzo, Starling and Revolut, offer free spending abroad but they come with monthly limits.
You can read our full list of our best picks for free spending abroad here.
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence. Terms and conditions apply on all offers.
This İs Money
