Should You Pay in Local or Home Currency: Guide to Overseas Payments While Traveling and Online

When you're shopping online or traveling abroad, you'll often encounter the option to pay in either the local currency or your home currency. This seemingly simple choice can significantly impact your wallet. It's crucial to understand the implications of Dynamic Currency Conversion (DCC) and make informed decisions to save money.

This guide will walk you through the ins and outs of paying in local or home currency, helping you navigate overseas payments like a pro, whether you're browsing Amazon from another country, withdrawing cash from an ATM, or swiping your credit card at a Parisian café.

Understanding Dynamic Currency Conversion (DCC)

Dynamic Currency Conversion (DCC) is a service that allows you to see the purchase amount in your home currency when paying with your card abroad. While it may seem convenient at first glance, DCC often comes with hefty hidden fees. When you opt to pay in your home currency, the merchant or ATM provider sets the exchange rate, which is usually marked up significantly compared to the mid-market rate.

This markup means you end up paying more than you would, as compared to using a card that does offer international transactions at mid-market rates — such as Wise.

The Benefits of Paying in Local Currency

Paying in local currency is almost always the better choice when shopping online or traveling abroad. Here's why:

• Avoid Exchange Rate Markups: By choosing local currency, you bypass the inflated exchange rates offered by DCC. Instead, your card issuer (your bank or credit card provider) will process the transaction using their exchange rate, which is typically much closer to the mid-market rate.
• Save Money: Even a small markup on the exchange rate can add up, especially for larger purchases or frequent transactions. Paying in local currency can lead to significant savings over time.
• Transparency: When you pay in local currency, you have a clearer picture of the actual cost of your purchase. You can easily compare prices and track your spending without the confusion of fluctuating exchange rates.

When to Pay in Local Currency

It's generally advisable to pay in local currency in the following situations:

• Online Shopping: When buying from international online retailers, always select the local currency of the site. For instance, if you're purchasing from Amazon.co.uk, choose to pay in British Pounds (GBP) rather than your home currency.
• ATM Withdrawals: When withdrawing cash from an ATM abroad, select the option to be charged in the local currency. This way, your bank's exchange rate will apply, which is usually more favorable than the ATM provider's rate.
• Online Card Payments: When using your credit or debit card abroad, always choose to pay in the local currency at restaurants, shops, and other establishments. This ensures that your card issuer's exchange rate is used, saving you money on every transaction.

Bank Card Exchange Rates: Not Always the Best Deal

While using your bank's debit or credit card exchange rate is generally cheaper than opting for DCC's marked-up rates, it's important to remember that banks usually add their own margin on top of the mid-market rate. This means you still may not get the best possible exchange rate.

Meet Wise: International Payments at Mid-Market Rates

While paying in local currency is a smart move, there's an even better way to manage your money abroad: Wise. In eligible countries, Wise offers international money transfers and a multi-currency account with a linked card that lets you spend at the mid-market exchange rate.

Here's how Wise can benefit you:

• No Exchange Rate Markups: Wise uses the transparent mid-market rate for all transactions, so you always know you're getting the best deal.
• Low Fees: Wise charges minimal, upfront fees for its services, making it a cost-effective option for international payments.
• Convenience: With the Wise debit card, you can spend in 150+ countries and withdraw cash from ATMs worldwide at the mid-market rate.
• Multi-Currency Account: Hold and manage money in 40+ currencies, making it ideal for frequent travelers or online shoppers who deal with multiple currencies.

If you're looking for a hassle-free and affordable way to manage your money across borders, we invite you to check out Wise. Say goodbye to hidden fees and hello to fair, transparent pricing.

Get Started with Wise 🚀

Conclusion

When it comes to overseas payments, paying in local currency is the key to avoiding unnecessary markups and saving money. Whether you're shopping online or traveling the globe, remember this simple rule: always choose local currency. And for the ultimate solution to international spending, consider getting a Wise card. With Wise, you can enjoy the peace of mind that comes with knowing you're getting the real exchange rate and avoiding those pesky hidden fees.