Brits travelling to Europe are being given a ‘key’ piece of financial advice which could help them avoid wasting cash needlessly. When paying by card abroad, the customer is often asked if they would like to pay for the transaction in pounds or the local currency.
Financial expert Matt Allwright has offered the final word on which option you should select to avoid needlessly throwing away money. Speaking to BBC’s Morning Live, he said Brits had one simple rule to always follow.
He said: “Repeat after me: always, always pay in local currency. It is key. If you pay in Sterling overseas, it has to go to another exchange process which we call a dynamic currency conversion. It is happening over there. You don’t get to see what that rate is but it is going to cost you even more than the exchange that has taken place already. You know the rate that you are paying already, because they will add a bit more to turn it back to Sterling.”
Many tourists are often stumped as to whether they should take foreign cash or card when travelling to Europe. Matt suggested taking both cash and card to offer both flexibility and the best deal.
He said he takes enough cash to last him for two days – so he can reach an airport in an emergency and pay for a couple of meals if his card does not work.
Discussing using cards abroad, he added: “We know that, very often, credit or standard debit cards which you might already have in your pocket already take exchange rates from Visa or MasterCard and add a foreign transaction fee and a Stirling transaction fee – those are the terms you need to be looking for from your regular provider.
“That can be up to three per cent, meaning something costing you £100 in foreign currency suddenly costs you £103. It also applies when you are buying foreign currency online. Some debit or credit cards don’t apply this fee. Check with your provider because it might be fee-free.
“You are still protected by Section 75 with credit card – that extra protection you get still works overseas. If you are buying bigger things overseas, that can be a really useful thing to have.
“Some cards, in addition to the three per cent, will penalise you further per transaction for spending money overseas – some even more when it is outside the European Economic Area. It could be 50p to £1.50 per transaction if you use one of those cards, making it a very expensive cup of coffee.”