20 January 2021

Why You Should Always Pay Using The Local Currency When Traveling? (Dynamic Currency Conversion)

“Would you like to pay using your own currency or the local currency?”

If you’re a frequent traveller and your mode of payment is usually through credit or debit card, then you must hear this question all the time. What’s the right answer? Most people don’t, but it’s pretty simple— always choose to pay in local currency. To understand why, you’ll need to find out about Dynamic Currency Conversion (DCC)

What is DCC?

Dynamic currency conversion (DCC) or cardholder preferred currency (CPC) is a credit card feature where the amount of a transaction is converted by a merchant or ATM from the local currency to the currency of your home country at the point-of-sale (POS). To put it simply, DCC allows a tourist to immediately find out the amount they are paying for in their own currency by converting the transaction amount in real time.

Pros of DCC

Real-time transparency 

When you choose DCC, the currency conversion happens in front of your eyes on the spot. On the other hand, credit card companies are not required to disclose the exchange rate until after the transaction is processed days after.

Easy tracking of expenses

It’s easier to keep track of shopping expenses when you are aware of the amount you are spending in your home country’s currency.

Cons of DCC

Conversion Fees

DCC merchants will always disclose the exchange rate, but they are not required to disclose any other charges they might add. Most of the time, they charge additional conversion fees on top of the exchange rate.

Non-competitive exchange rates

Since the merchant will be the one setting the exchange rate, the rates won’t be as competitive as the one given by your credit card company. Making you pay more in the end.

While having real-time transparency of your purchases may seem like a better option, you can definitely save more money when you opt out of DCC. Just remember to decline DCC when your are given the option. In some cases, shops don’t even bother to ask and would just go straight to DCC. When this happens, just politely tell the cashier that you will pay in local currency.

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