Make This One Simple Choice, and Save a Ton of Cash Every Single Time You Travel

You'll get the question, so give the right answer.

While doing a little souvenir shopping on your overseas travels, you may be confronted with a confusing question as you present your credit card at the cash register. "Would you like to pay in dollars or euros?" When the shop assistant asks, it may seem like a thoughtful gesture intended to help you understand exactly how much your purchases cost by converting the price into a currency you understand. But what they won't tell you is that this "convenient" service of "allowing" you to pay in your home currency versus local currency will leave you... out of pocket. Here's why its always wiser to pay in the local currency instead.

Unless you happen to know the exact exchange rate at the moment you are making your purchase, and are a total math whizz, you probably won't notice that the exchange rate being offered is most likely unfavorable to you — and the difference will certainly not work in your favor. Moreover, you'll be hit with an additional currency conversion fee of one to three percent. And that's in addition to any foreign transaction fees applied by your credit card company — although you should definitely get a credit card with no foreign transaction fees, it won't help you avoid this, separate, currency conversion fee.

Admittedly, unless you are making a huge purchase, one to three percent is not a lot, but wouldn't you rather give that money to your swim-up bartender than a faceless financial corporation? And it certainly adds up if you pay that fee on everything you buy.

This process is called Dynamic Currency Conversion, a service that converts the cost of a customer's purchase into their home currency, but has no benefit beyond that. So, next time you're asked if you'd like the cost of your purchases to be converted into U.S. dollars, politely decline. 

Stay on your toes, though, as the pesky service has spread to cash machines. Next time you go to withdraw money with your debit card from a foreign ATM, an on-screen message might ask if you would prefer to have your account debited in your home currency. Once again, for the very same reasons, just say no.

And, most of all, never sign an invoice in American dollars when check out of your hotel — with its substantial bill for your entire stay, including meals, excursions, and other purchases. This single bill alone can represent most of your travel costs, and the difference can be a big sum.

Now you know!

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