Don't Fall for Dynamic Currency Conversion - Why Paying in Local Currency is the Way to Go!

 

Don't Fall for Dynamic Currency Conversion - Why Paying in Local Currency is the Way to Go!

Are you planning a trip abroad and wondering how to handle currency exchange? It's tempting to pay in US dollars when the payment kiosk asks if you want to pay in local currency or dollars, but don't fall for this trap! Dynamic currency conversion (DCC) is a sneaky way for businesses to make a profit at your expense. Here's why you should always pay in local currency when traveling.

First of all, what is DCC? When you're traveling and using your credit card to make a purchase, some merchants will offer to convert the charge into US dollars for you. They'll tell you that it's more convenient or that it will save you money on foreign transaction fees. However, what they don't tell you is that they're using their own exchange rate, which is often inflated and can cost you an extra 3-7% on top of the actual exchange rate.

On the other hand, when you pay in local currency, your credit card company will use the current exchange rate, which is typically much more favorable. You'll end up saving money and getting a better deal overall. Plus, it's a good idea to get familiar with the local currency and have some cash on hand for small purchases or situations where credit cards aren't accepted.

Another thing to keep in mind is that DCC is often offered by businesses that cater to tourists, such as hotels, restaurants, and souvenir shops. These places know that travelers are more likely to fall for the convenience of paying in dollars, and they take advantage of this fact. By paying in local currency, you'll be supporting local businesses and getting a more authentic travel experience.

So next time you're faced with the option to pay in dollars or local currency, remember to say no to DCC and choose the local currency instead. Your wallet (and your travel experience) will thank you!

Sources:

https://www.creditcards.com/credit-card-news/dynamic-currency-conversion-dcc-credit-card-foreign-purchase-1264/

https://thepointsguy.com/guide/avoid-dynamic-currency-conversion/

https://www.tripsavvy.com/what-is-dynamic-currency-conversion-468491