Is it better to pay in local currency?

You know that feeling, you’re standing at a bustling café counter in Paris, croissant in hand, contactless card poised to tap, when the screen flashes with “Pay in pounds or euros?” Suddenly, your brain is doing cartwheels faster than the barrister is slinging out coffees, all while the queue behind you grows. It’s a small choice, but one with big consequences for your travel budget. And the question many travellers whisper to themselves is: is it better to pay in local currency?

In this guide, we’ll take a deep dive into the world of holiday spending. From Dynamic Currency Conversion (DCC) to sterling vs local currency, we’ll help you navigate this surprisingly common travel dilemma. By the end, you’ll know exactly whether to press that pound or that euro (or dollar, or yen, or dinar) button. Spoiler alert: your wallet will thank you.

What is dynamic currency conversion?

Dynamic Currency Conversion (DCC) might sound like something Doc Brown would put in his DeLorean, but it’s actually a really simple to understand and useful service some shops, restaurants, and ATMs offer when you’re abroad. It allows you to pay in your home currency, British pounds for example, instead of the local one. For some people this might be the most convenient options. You can instantly recognise the number on the screen you don’t have to do any quick mental arithmetic, and you know quickly will be coming out of your bank account back home.

So, while DCC may look like a shortcut, it’s often a detour straight into higher costs.

What’s the difference between paying in sterling vs local currency?

Here’s where things get interesting. When you choose to pay in sterling abroad, you’re effectively letting the local merchant or ATM pick the exchange rate for you. Think of it like asking a taxi driver to set their own fare without telling you before you set off, it might get you from A to B, but you’re unlikely to like the price at the end.

Paying in local currency, on the other hand, hands the reins back to your bank or card provider. And more often than not, their exchange rates are fairer, and their fees more transparent. For example, many major cards providers offer near-market rates with only a small, or no, foreign transaction fee. That means you end up spending less for the same purchase, whether it’s tapas in Barcelona or souvenirs in Marrakech.

In short, sterling abroad equals merchant markups. Local currency equals better value. It’s really that simple.

What to watch out for when paying on card abroad

Travelling with plastic (or metal, if you’ve gone premium) is wonderfully convenient, but it pays, quite literally, to be alert at the checkout. Here are a few red flags to keep in mind:

• Unfamiliar payment terminals. If you’re presented with an option to pay in your home currency, don’t assume it’s the safest choice. It often isn’t.

• Sneaky service charges. Some DCC offers bundle in extra fees that aren’t clearly displayed. That cheap coffee in Lisbon could suddenly taste a bit bitter.

• ATMs abroad. Many cash machines also push the option of withdrawing in pounds rather than the local currency. Decline it and choose the local option, you’ll almost always get a better deal.

Remember: a moment’s pause at the till can save you pounds on your statement.

Should you pay in local currency?

Now for the million-pound (or should we say, million-euro?) question: should you pay in local currency? The answer is a resounding yes. Paying in the local currency keeps costs lower, exchange rates clearer, and nasty surprises at bay. It means your provider, not the merchant, decides the conversion rate, which is almost always to your advantage.

The benefits of paying in local currency

1. Better exchange rates. Your bank or card provider typically offers fairer rates than merchants abroad.
2. Lower fees. Avoiding DCC markups means you keep more money for what matters, like gelato, souvenirs, or that last-minute day trip.
3. Transparent charges. No sneaky conversions at inflated rates, just clear transactions you can track.

So the next time you’re asked, “pay in local currency or GBP?” choose the local option with confidence. It’s one of the simplest travel hacks going.

Make foreign currency payments a breeze, with the Travelex Money Card

Here’s another top tip, if you want to take the guesswork out of holiday spending altogether, take the Travelex Money Card, powered by Mastercard®. Our prepaid travel card lets you lock in exchange rates before you travel, so you know exactly what you’re spending, no nasty surprises when you check your bank statement back home.

• Ease of use: Tap, swipe, and spend like a local wherever you go.

• Seamless spending: Multiple currencies on one card, perfect for multi-country trips.

• Locked-in rates: Avoid exchange rate fluctuations by fixing your rate in advance.

It’s the ultimate travel companion, right up there with noise-cancelling headphones and a decent sun hat.

Final word

So, is it better to pay in local currency? Absolutely. When faced with the choice, always lean towards the local. It’s fairer, cheaper, and keeps more money in your pocket for the experiences that really matter on holiday. Dynamic Currency Conversion might look convenient, but in practice it’s a costly detour. By arming yourself with this knowledge, and a Travelex Money Card, powered by Mastercard®, you’ll breeze through every payment abroad like the savvy traveller you are.