Dynamic Currency Conversion – Benefit or Rip Off?


Dynamic Currency Conversion (DCC) allows you to pay in either your own or the local currency when using an ATM or credit card terminal when abroad.

There are extra costs associated with both options.

UK banks charge fees of up to 3% for most foreign transactions, such as using your debit card to take out cash from cash machines or buy things while you’re abroad

For Irish banks the fees and charges are quite similar.

Using Dynamic Currency Conversion DCC and choosing to pay in your own currency gives you an immediate conversion rate but includes extra fees which are split three ways between the card issuer – your bank, the merchant – the restaurant or store  and the DCC provider.

Every time you press the button “Pay in Your Own Currency” you are inadvertently ripping yourself off.

Most people will choose this option though, as it is counter-intuitive to pay in a foreign currency given the logic that another conversion fee might seem likely.

Large merchants like hotel groups and airlines who take online payments get a cut of the higher customer charges and it is sometimes difficult to locate where you can pay in the local currency to avoid DCC charges.

Pay in the Local Currency

If you choose the option to pay in the local currency you will still be charged exchange fees and this will show on your statement. However the fees will be a lot lower than using DCC.

The UK Cards Association offers the following advice:-

“A retailer or ATM may give you the choice of paying in your
home currency or the local currency. If you pay in your home
currency, make sure the exchange rate is competitive. If you
are in any doubt, pay the bill in the local currency as it will
generally be cheaper.

The Irish Competition and Consumer Protection Commission advises those travelling outside the euro zone that “it is usually more cost effective to pay in the local currency“.

Bottom line

Dynamic Currency Conversion DCC may not be in the same category as other travel scams, but it can be an easy way for you to spend more money than you should when you travel outside your own currency area.

Knowledge is half the battle and I hope this post has given you some ideas on how to avoid being overcharged on your next trip abroad.