If you are planning a Christmas trip abroad, beware when you use a credit or debit card to pay in a hotel, shop or restaurant.


You may be asked if you want to pay in sterling or the local currency and perhaps shown the amount in each. The familiar pound sign (or the letters GBP) can seem comforting, but don’t be fooled.

This apparently friendly offer is a trick that can cost you a supplement of 3 or 4 per cent or more on the price you actually need to pay.

Without fail, always choose the local currency.

When you pay in a foreign currency using a Visa, MasterCard or American Express debit or credit card, the network converts the amount into sterling on the spot and that is what you will be charged.

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These financial giants convert billions of pounds every day and get the very best market price. However, if you accept the offer to pay in sterling, the local bank will make the conversion at its own rate – and probably pay the retailer a commission as well. All that cost will be met by you.

This “pay in sterling” offer is a common trick seen throughout Europe and I also found it in Hong Kong recently.

The good thing about this caper was that I got to bring home the transaction slip with the figures that proved exactly what a scam it is. On my spending there recently on hotels, food and gifts, choosing to pay in sterling would have added 3.5 to 4.5 per cent to the prices I paid.

My card statement showed that I spent a total of £1,198.60. If I had accepted all the sterling prices it would have cost me £1,243.88 – an extra £45.28 (or nearly 3.8 per cent).

You will save more if you get a new credit card before your trip that doesn’t charge you a transaction fee of up to 2.99 per cent for paying in a foreign currency.

There are 16 cards that make no charge for purchases in foreign currency anywhere in the world.

They include the Halifax Clarity MasterCard, which also makes no charge for foreign cash withdrawals – though it does charge interest from the day of withdrawal until it’s paid off.


Local banks may add a charge to any cash withdrawn.