Why You Should Always Choose Local Currency When Using an ATM Abroad
If you’ve ever stood at a foreign ATM and been asked whether you want to pay in your home currency or the local one, you’ve probably thought choosing your own currency was the safer, smarter move. It feels familiar, it looks like you know exactly what you’re spending, and there’s a certain comfort in seeing a number you recognize. But that instinct is actually costing you money, and a lot of travelers don’t even realize it’s happening.
The process behind that seemingly helpful option is called Dynamic Currency Conversion, or DCC. It allows the ATM provider to convert the transaction into your home currency on the spot, using their own exchange rate rather than your bank’s. The problem is that their rate is almost always worse than what your bank would offer, meaning you end up paying a premium for the convenience of a familiar number on the screen. It’s a quiet little fee that slips by most people without a second thought.
To put it in real terms, consider withdrawing the equivalent of around $22 at a Spanish ATM. If you agree to let the machine convert that into pounds on your behalf, you might end up being charged around $19. If you decline and let your own bank handle the conversion instead, the same withdrawal could cost you slightly less. It doesn’t sound massive on a single transaction, but multiply that across every ATM visit and every card payment on a two-week trip and it starts to add up to a meaningful chunk of change.
Personal finance expert Martin Lewis has weighed in on this topic too, sharing advice on how to handle travel money more broadly. He recommends using a specialist travel card and, if you do need cash, withdrawing it from an ATM at the airport when you arrive. His general take is that doing your research before you travel puts you in a far stronger position than trying to figure out the best rate once you’re already at your destination surrounded by tourist-facing exchange booths with poor rates.
Lewis also points out that bureaux de change in tourist hotspots tend to offer the worst rates because there’s simply less competition in those areas. Getting your cash sorted before you leave home gives you the chance to compare rates and find a better deal. He does acknowledge that if you know a specific local exchange that consistently beats US prices, it can sometimes make sense to wait, but that’s only if you genuinely know what you’re walking into. Wandering into a random exchange shop hoping for the best is rarely a winning strategy.
The bottom line is pretty straightforward. Whenever an ATM abroad asks whether you want to pay in your home currency or the local one, always go with the local currency. Let your own bank do the conversion, because they’re almost certainly going to give you a better rate than the machine will. It’s one of those small travel habits that takes zero extra effort but can quietly save you money every single time.
If you’ve been caught out by this before or have your own tips for saving money on currency abroad, share your experience in the comments.
