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Credit Card Charges: Local Currency OR USD?

Credit Card Charges: Local Currency OR USD?

on Aug 19, 2013 in Blog, Travel Tips

A few years ago, we learned that many credit cards carry a steep fee associated with charges made in a foreign currency. These fees add up quickly, and often make cash a better payment option (even when you add in the associated ATM fees).

There are a handful of credit cards out there with a benefit of no foreign transactions fees. We applied for one of these cards a few years ago, and generally only use it when traveling internationally. Whenever possible, we look to use the card to pay, as it is the best means to avoid additional fees or charges.

In some locations, when paying with credit card, the merchant will ask if you would like to pay in the local currency or in US Dollars. You should ALWAYS choose the local currency! In general, the vendor provides a poor conversion rate plus an exchange mark up fee that is added to these transactions.

What happens if you choose dollars

On Saturday, we were filling up our car with gas. We used our credit card to pay for the transaction. When running the card, the merchant asked Kevin if he would like it in Euros or US Dollars. On accident, Kevin responded US Dollars and before he could correct himself, the merchant selected USD on the point of sale machine. The transaction went through in dollars and the receipt had a disclaimer indicating that we accepted to be charged per our choice and that the choice was final! Here’s┬ásome useful information from that receipt that demonstrates the difference in charges and why you should always select local currency.

Sale Amount: 58.17 Euros
Conversion Rate*: 1.400146
USD Sale Amount: $81.45
(*Receipt Notes a 3.5% exchange rate mark up)


Had we elected to have the transaction in Euros, then the charges would be as follows:
Actual Conversion Rate on Date: 1.33298
USD Cost: $77.54

The poor conversion rate plus a 3.5% mark up resulted in us paying $3.91 more on this transaction!

Another Reinforcement

A few days later when checking into a hotel, we provided our credit card to the desk clerk. He ran the card and again asked us if we would like the charge to be in Euros or US Dollars. We both emphatically responded, “Euros!”. He looked at us (like we had uncovered a dark secret) and asked how we knew to select Euros. We just responded that from experience it was more advantageous for us! He slyly nodded in agreement.

Bottom line, if traveling internationally be sure to arm yourself with a card that has no foreign transaction fees and also be sure to ALWAYS elect to pay in the local currency.

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