However good it tastes, you may find yourself plunged back into a stressful
situation when the bill arrives. Typically, when you put your card into a foreign
payment terminal, it will ask you to make a decision: “Do you want to pay in
pounds or euros?”
Pick the wrong one, and you could end up paying nearly 8 per cent more than
you need to, according to new research into the phenomenon that is “dynamic
So before you jet off, repeat this mantra: never pay in pounds abroad, always
pick the local currency. Now thatʼs lodged in your head, Iʼll explain why.
Dynamic currency conversion— in my view, a fancy name for a rip-off — is
widespread in Europe and parts of Asia, but less so in the Americas.
European “chip and pin” card transactions in shops, restaurants and hotels and
cash withdrawals from ATMs are likely to give you a choice between GBP and
EUR. Psychologically, opting to pay the amount shown in pounds could seem
like the right choice. You know where you are with pounds. But the exchange
rate that you are locking into is likely to be a shocker.