Why You Should Always Pay in Local Currency When Traveling

When considering which credit card to apply for, you may first notice if the card has a sign up bonus or offers a high rate of rewards. But if you’re planning to travel overseas, ignore the rewards and make sure you’re getting the card’s increasingly common advantage: zero international transaction fees.

When you use your debit or credit card in another country, your bank must convert this fee into US dollars so that it can withdraw money from your account. The fee for this can range from one to three percent.

It may not sound like a lot, but there is an added benefit of using a card that doesn’t charge that small commission: you can also avoid the latest travel scam.

Windu Goel tells his story in The New York Times : While dining at a popular tourist destination in India, the waiter added 5% to the bill and then presented the receipt in dollars instead of Indian rupees. The server did not ask him for permission to do this, which Goel points out is required for Visa and Mastercard. This move is called dynamic currency conversion. “Foreign traders add a hard mark-up to your account, convert it to your home currency, and then claim it is beneficial to you,” Goel explained.

This maneuver is pulled not only by tourist attractions. Goel, who travels the world frequently, said he has seen him everywhere, from local pharmacies to major hotel chains. Sometimes you will be given a choice at the card machine to pay in your local currency or your home currency.

This is where the zero transaction fee card comes in handy. If you have one, you can always choose – or require, if required – that the purchase be made in your local currency. If you have an American Express card, you have nothing to worry about – it does not support dynamic currency conversion.

Then, Goel says, you should double check your receipt to make sure the company hasn’t changed currency without your consent. “The giveaway you received is when the payment receipt shows the amount in your home currency with a microscopic print that says you have given consent,” he wrote.

If you find this, and the seller does not cancel the purchase and does not call back, Goel offers to challenge the charge .


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