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Avoid This Foreign Currency Ripoff At All Costs

by joeheg

When you’re traveling outside of your home country, figuring out how much things cost in relation to your home currency can be difficult. You need to know the current conversion rate between the two currencies and then apply that to the purchase price. Sometimes you can eyeball the price when it’s a simple ratio. US Dollars to Japanese yen is usually somewhere around 1:100:

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If I was buying something that cost 1000 Yen, I’d know that’s about $10 or a little less. Things get a little more tricky when traveling to the United Kingdom.

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If you’d see something that costs £100, it also costs $128 USD. So just think that everything is 30% more expensive than it appears to be and you’ll be fine.

What about if you’re going to Thailand. One US dollar equals 30 Thai Baht. Try doing that math in your head all the time.

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Imagine if your hotel, or restaurant or gift shop offered when you handed them a credit card if you would like to pay for the charge in local currency or your home currency? If you’re tired of doing math, I’d bet you’d jump at the chance to pay the amount in your local money, right?


However, If you ever get this question, ALWAYS PAY IN LOCAL CURRENCY!!!

The service being offered is called Dynamic Currency Conversion and it’s a total ripoff. What the location does is convert the purchase charge to your currency at an exchange rate of their choosing. This is almost always higher than the currency exchange rate that your bank would charge. If you think using this service will avoid your bank’s Foreign Exchange Fee, you’re wrong. That fee is charged for any transaction taking place outside of your home country, regardless of the currency used to process the charge.

Now I know about all of this and yet a restaurant we visited on our last visit to the United Kingdom was still able to trick us into paying in USD instead of GBP.


Despite what the receipt says, we were never offered a choice of currencies that we remember. We assume it was listed on the payment device where we entered our chip to pay the bill.

I used to think this ripoff was only used to overcharge Americans who were traveling overseas. However, I’ve learned that US merchants will also use this scheme on guests in the USA from other countries. No matter where you are from, here is what you need to do:

  • Always make your purchases in local currency.
  • Use a credit card that has no foreign exchange fees.

If you’re from the US and traveling abroad, there are many cards with no exchange fees, If you are traveling from the UK, you also have several options, including the travel credit card offered by the Post Office,

The reason you want to use a credit card is that the transaction cost will convert at the bank rate the time the transaction was completed. I guarantee you that the exchange rates the banks charge each other are better than the rate you’ll be given when buying something as a visitor to a foreign country.

If you remember one thing when traveling overseas (or simply buying anything in a foreign currency), ALWAYS pay in local currency. Please and thank you!

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This post first appeared on Your Mileage May Vary


JJ November 10, 2019 - 10:17 am

I always pay in local currency but I never realized that they still charge the foreign transaction fee even if is paid in USD. None of my cards have those fees anymore, but it’s good to know. Also, thankfully I have the Schwab ATM card which refunds all fees because Brazil charged me the equivalent of $19 to take $100 out of an atm!

Kelly MacKay November 10, 2019 - 10:25 am

This is excellent and I always use local currency. I am planning my Peru trip and everything I try booking in listed in USD prices even though it should be in Peruvian Sol. I will be taking Local currency only.


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