The Money Saving Expert has issued a warning to anyone going on holiday this summer
A regular holiday question could leave travellers out of pocket, warns Martin Lewis – and it is one many get wrong without even knowing it. The money-saving expert issued the warning during a This Morning appearance on Tuesday, where he outlined why holidaymakers ought to consider carefully before accepting a currency conversion offered by foreign ATMs and card terminals.
Speaking on the ITV show, Martin was questioned whether travellers should opt to pay in pounds or the local currency while abroad. His response was unequivocal – in most instances, it’s the latter.
Detailing how the mechanism operates, he stated that when an ATM or card terminal enquires whether you wish to pay in pounds or euros, for instance, it’s essentially asking who should perform the currency conversion.
“If it’s euros, do you want your card company to do the conversion? If it’s pounds, we will do the conversion for you and then charge your card,” Martin clarified.
He highlighted that numerous travellers now utilise specialist overseas spending cards that provide exchange rates close to the interbank rate. In such circumstances, permitting the card provider to manage the conversion typically yields a superior deal.
Nevertheless, Martin stated even standard debit and credit cards will frequently provide a more competitive exchange rate than the one supplied by a foreign ATM or merchant.
“Even the bog standard pretty pants cards here tend to be better than the shop abroad doing it,” he said, cautioning that overseas providers can add a considerable markup to the exchange rate.
This additional cost can occasionally reach as much as 6 or 7 per cent, while certain foreign cash machines may also levy an extra withdrawal fee on top of this.
This practice is referred to as Dynamic Currency Conversion (DCC). According to consumer group Which?, it permits foreign retailers and ATM operators to convert a transaction into pounds at the point of sale, yet the exchange rates on offer are frequently far worse than those provided by banks and card issuers.
Martin further cautioned that certain cash machines actively prompt users to opt for pounds, as it proves more lucrative for the operator.
Describing the on-screen prompts, he quipped: “I want euros, please. Are you sure? We won’t do the conversion. Are you absolutely sure? Yes, I want euros.
“The ATM… they are desperate to persuade you to let them do the conversion because they make a lot of money from it.”
His guidance was straightforward. If you’re in Europe, pay in euros. If you’re in the United States, pay in dollars. Wherever you’re travelling, choose the local currency rather than pounds whenever you’re given the option.
