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Should you pay in local currency outside the U.S.?

Whether you’re buying a meal in Europe or taking a taxi in Asia, you may be asked if you want to pay in dollars or the local currency.

It may be tempting to settle for the amount you’re offered in dollars (USD), out of habit and familiarity. But in most cases it will cost you more.

Here’s a guide to help you weigh the pros and cons.

What is Dynamic Currency Conversion (DCC)?

If you choose to pay in your home currency rather than the local currency, the conversion takes place at the point of sale – known as dynamic currency conversion, or DCC.

The benefits of paying in local currency

You can typically save by opting to spend in the local currency. This would mean, for example, choosing euros in Spain or rupees in India.

When you choose to pay in the currency of the country or region you’re in, Visa or MasterCard will set the exchange rate. Your bank may charge a fee to carry out the transaction.

The rate your card provider uses when processing local currency payments will, in most cases, be lower than that of the merchant, or foreign bank, when paying in dollars (USD).

Certain retailers outside the U.S. might automatically assume you want to pay in dollars unless you say otherwise, so always double check the amount before you pay. 

What to keep in mind if paying in dollars

If you decide to pay in USD while outside the U.S., it can be more expensive than you expect, as stores and restaurants can set their own exchange rates. They may also add extra conversion fees on top. 

Remember, it's always best to check which currency you're going to be charged in, so you make an informed decision before paying.

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