What you need to know when using an ATM abroad

Whenever a merchant or ATM asks you which currency to charge you in, there's only one right answer… the local currency wherever you are.

In Mexico, that’s pesos. In Canada, Canadian dollars. In the Eurozone, choose to pay in euros. In Britain, pounds. In Australia, AUD. You get the idea. Always, always, always choose to be charged in the local currency of the country you're in.

Let’s say you’re on vacation in Mexico and a message on an ATM flashes up asking if you want to be charged in USD. Say no. Don't let the machine do your currency conversion. Why? Keep reading to find out all you need to know about keeping down costs at ATMs globally.

Here's why you shouldn't let an ATM do conversion for you

Foreign ATMs and card machines might flash up a message along the lines of: This ATM offers conversion to your home currency.

On the surface, that seems pretty harmless. You'll be able to see exactly what you're paying in USD, without needing to do any math or any conversion calculations.

Unfortunately, it’s not that simple. If you allow the ATM to do the currency conversion you’ll be caught out by a common pitfall experienced by travelers the world over: Dynamic Currency Conversion (DCC).

What is DCC and how does it work?

DCC is sold as a service to travelers as it removes the need to convert currency in your head to work out what you’ve paid in dollars. Instead, the ATM or point of sale machine will tell you neatly what you’ve spent.

However, it’s not that simple - and DCC usually means you’ll pay more. That’s because DCC means the foreign ATM provider or bank will set an exchange rate for your transaction. And this is likely to include a markup or extra fees, meaning you pay more in the end compared to letting your own card do the currency conversion for you as would otherwise happen.

If you’re asked whether you’d prefer to pay in dollars, the best answer to give is no. That way you’ll get the network or card provider’s exchange rate - which will usually be far cheaper than letting the merchant do the exchange for you.

Use a Wise card - and stop worrying about hidden foreign ATM costs

Want an easy solution? Get a Wise card. Open a Wise account online or in the Wise app for free, order your card, top up in USD - and then spend as you travel with no worries about DCC. The Wise account supports holding and exchange for 40+ currencies.

If you have the currency you need in your account there’s no fee to spend it. And if you don’t, your card can convert to the currency you need wherever in the world you are, with the mid-market rate and low fees from 0.43% - which means you never need to worry about DCC again.

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Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information

Still unsure about DCC? Check out some real examples below

What happened when I used a UK card in a foreign country?

In this example, I'm taking out EUR in Barcelona, with a UK card.

I wanted to get 20 EUR from a Spanish ATM owned by Santander bank®, using my HSBC® debit card from the UK (GBP).

The screen says Press Yes for GBP, No for EUR.

With DCC (charged in my home currency - GBP)

If my bank had actually charged me using the mid-market currency exchange rate (the same rate you'll find on Google®), then at the time my money was worth even more than I realized.

When I chose to be charged in the local currency (EUR in this case)

Again, the theoretical cost of 20 EUR at the mid-market rate (the rate I looked up on Google) was 15.79 GBP.

Now. Let's look at the opposite...

What happened when I used an EU card in a foreign country (the UK)

Taking out GBP in London, with an EUR card. I took out 100 GBP from a UK ATM using a EUR card issued by an Estonian bank.

The options that appeared

No DCC commission was stated on-screen this time.

If I'd have chosen DCC and was charged in my bank's home currency (EUR in this case)

When I chose to be charged in the local currency (EUR in this case)

Moral of the story?

Choose GBP when in the UK.

And MXN when in Mexico.

And CAD when in Canada.And EUR when you're in a Eurozone country (you know - Spain, Germany, France, Italy, Ireland, Portugal, the Netherlands, etc.)And AUD when in Australia.And NZD when in New Zealand.

You get the picture.

Don’t get caught out by DCC at foreign ATMs

So there you go. Just always keep that simple rule in mind: choose to be charged in the local currency of the country you're in, and don't let the ATM do your conversion for you. Or even better - get a Wise card. You won’t need to worry about DCC, currency conversion uses the mid-market rate, and the fees are low and transparent. Easy.