Paying abroad with a card

• When a card machine or ATM asks whether to charge you in your own currency, choose the local currency.
• Use a card with no foreign transaction fee if you have one; many banks offer one.
• Take out cash in fewer, larger amounts, so flat ATM fees are paid less often.
• Check the mid-market rate before you travel, so you can tell a fair price from a poor one.

1. The exchange rate

When you pay in the local currency, the card network, such as Visa or Mastercard, converts the amount at its own daily rate, which is usually close to the mid-market rate: the midpoint between what buyers pay and sellers ask on the currency market. Both networks publish their rates, so you can check one after a trip.

2. Your bank’s foreign transaction fee

On top of the network’s rate, many banks add a percentage to every purchase or withdrawal in another currency, often around 3% on standard US credit cards, and a similar non-sterling fee on many UK cards. It shows up as a separate line on your statement, or folded into the amount. Plenty of cards charge nothing, and it’s worth checking your card’s terms before you go.

3. Dynamic currency conversion

This is the expensive one. Abroad, a card machine, a hotel or an ATM may offer to charge you in your home currency instead of the local one: “Pay in US dollars?” It sounds helpful, because you see a familiar number. But the conversion is then done by the shop’s or ATM’s provider, at a rate it sets, which is often several percent worse than your card network’s. You may still pay your bank’s foreign transaction fee on top. Choosing the local currency almost always costs less.

Say a dinner in Rome comes to €100, and the mid-market rate is 1.09 dollars to the euro, so the fair price is $109.00.

• Charged in euros, on a card with no foreign fee: about $109.00, since the network’s rate is close to the mid-market rate.
• Charged in euros, on a card with a 3% fee: $109.00 plus $3.27, or $112.27.
• Charged in dollars at the terminal’s rate, 6% worse: $115.54, before any fee your bank adds.

The same dinner costs up to $6.54 more depending on two choices, and over a week of meals, hotels and shopping the gap grows quickly. To see what any rate costs you, type it into Check a quote on our currency converter: it compares the rate with the mid-market rate and shows the difference.

Taking out cash abroad can cost you twice: your own bank may charge a fee for using another bank’s machine abroad, and the machine’s owner may add its own charge, which the screen should show before you confirm. Many machines also offer dynamic currency conversion (“Convert to US dollars?” or “Accept this rate?”); decline it and take the cash in the local currency. Because the fixed fees are per withdrawal, two larger withdrawals usually cost less than five small ones. Machines inside banks are often cheaper than standalone ones in tourist areas.

Hotels, car rental desks and some fuel pumps place a temporary hold on your card, which can be larger than the final bill and can take days to disappear after you leave. On a debit card, that money is out of your account in the meantime, so a credit card is often the better choice for deposits. The hold is converted too, so the amount you see may differ slightly from the final charge.

• Read your card’s terms for its foreign transaction fee and foreign ATM fee, or ask your bank.
• Carry two cards, ideally on different networks, in case one is declined or lost.
• Look up the mid-market rate for where you’re going on our exchange rate pages, so a counter’s or a terminal’s rate can be judged on the spot.
• Sending money rather than spending it? That’s a different set of costs: see sending money abroad.