Holidaymakers jetting abroad this summer have been warned to only pay in local currency when using cards to avoid shelling out extortionate fees.
Making payments in pounds rather than the local currency at shops, restaurants and even at cash machines leaves tourists out of pocket after tempting them into a poorer exchange rate.
The practice, known as ‘dynamic currency conversion’, allows retailers and foreign banks to set their own conversation – adding up to 10% on bills.
Last year £490 million fees was taken out of the pockets of unsuspecting Brits, according to research carried out by Fairfx.
To avoid being ripped off travellers are advised to always choose the local currency no matter where in the world you are. And the same applies if you’re using an ATM.
Dynamic Currency Conversion (DCC) is optional, although it’s been reported that merchants have run this automatically. This is against the terms and conditions of Mastercard and Visa.
If you’re billed in pounds, refuse it. Write ‘DCC rejected’ on the receipt and insist on being charged in local currency.
Ian Strafford-Taylor, chief executive of FairFX, said: “When asked if they want to pay in pounds or local currency, opting to pay in pounds appears logical to holidaymakers as naturally they will think in their home currency.
“But be warned. This is nothing but a hyper-inflated rip-off, duping holidaymakers into paying unnecessary fees and accepting unfavourable exchange rates.
“The key thing to remember is, when abroad and asked if you want to pay in pounds or the local currency, always pay in the local currency to avoid nasty surprise fees.”
FairFX tips to avoiding being ripped off
- If you’re asked what currency you want to pay in, always choose the local currency. And the same if you’re using an ATM.
- You have a choice: Dynamic Currency Conversion (DCC) is optional, although it’s been reported that merchants have run this automatically. This is against the T&Cs of Mastercard/Visa.
- Be vigilant: If you’re billed in pounds, refuse it. Write ‘DCC rejected’ on the receipt and insist on being charged in local currency.
- Debit and credit cards are a good back up for travel money but if you want to guarantee your rate, use a prepaid currency card which locks in your exchange rate when you buy. If you’re using a prepaid currency card loaded with pounds, similarly always choose to pay in local currency to avoid third party charges and rates.
- To get the best value for money before you book, pick a destination where you get more bang for your buck with more favourable long-term exchange rates.
- Set up a currency alert with FairFX so that you are alerted to the best time to buy when the rate moves in your favour.
- Whatever you do, don’t leave sorting out your travel money until the last minute as you could be left severely out of pocket. Exchange rates at the airport can be 15 percent more expensive than elsewhere meaning that you could lose £147 for every £1,000 you exchange.
- Beware of the sneaky Airport ATM: If you are savvy enough to have a Euro or Dollar prepaid currency card, be careful about taking cash from airport ATMs.
When withdrawing currency from UK airport ATMs with a Euro or Dollar prepaid card, most of them charge you in Pounds. instead of your Euros or Dollars, and hit you with hidden conversion fees