Should you pay in US Dollars (USD) or the local currency at international airports? Local or home currency? Euros or dollars? If you’ve traveled abroad, you’ve probably been faced with these questions when paying by credit card.RELATED ARTICLES: Best money market accounts for high balances: check this regions money market account interest rate
I’ve been traveling abroad lately and I had no idea which to choose, or whether or not it even mattered at the time. I mean, I have a credit card with no foreign transaction fees, so I assumed it didn’t really matter.
For the most part, that $5 coffee and $6 pastry here and there won’t really matter. But since you’re given the choice, at least make the right one.
USD Vs Local Currency
This last happened to me at the Dubai International Airport, where I was asked if I wanted the purchase charged in US dollars or AED (Arab Emirates Dirham). You’ll get asked everywhere throughout the world as well when using your credit card (e.g. Euros or US Dollars?).
The bill may look more familiar to see the total in US dollars, but you’re going to get charged a separate currency conversion fee, even if your credit card has no foreign transaction fees.
While I didn’t get the impression when asked personally, I’ve read that many merchants would be more eager to bill you in US Dollars instead of the local currency due to an extra profit margin (perhaps 3% or more).
Now, if you don’t happen to have a credit card with no foreign transaction fee (you should!), you’re going to get hit with even more fees (~3%)!
Dynamic Currency Conversion (DCC)?
Looks like that’s what it’s called when you pay extra fees to see the bill printed in US Dollars.
Apparently this will happen with Visa and MasterCard, where the business can give you a choice of currency during the transaction. American Express doesn’t allow for it.
If you like seeing your receipt in USD, then that’s totally up to you. Personally, I don’t see the logic if you’ve already made the purchase by the time the receipt is in your hand. I’d much rather prefer using a currency conversion app before making any purchase decision anyway (I use , it’s free and updates everyday it seems).
I even remember asking the girl at the register my first trip what do most customers choose, and she just shrugged her shoulders and said everyone is different. It didn’t seem like she was acting as if she didn’t want to let me in on the secret, but rather she actually had no idea. So, I suspect many other travelers are also pretty clueless on the matter.
When given the option, always choose to pay for your purchases at international airports (or anywhere else when abroad) in the local currency, rather than in US Dollars. Save that extra 3% or so in fees, and get a credit card with no foreign transaction fees if you don’t already have one!
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