Should You Pay in Local Currency or GBP?

Learn why paying in local currency is better when abroad and how to avoid hidden conversion fees.

Is It Better to Pay in Local Currency When Abroad? (UK Guide)

If you've ever used your debit or credit card abroad, you've likely seen this pop up: "Would you like to pay in GBP or local currency?" While it may seem convenient to pay in pounds, doing so is usually the more expensive choice. This guide explains why paying in local currency is nearly always better, how dynamic currency conversion works, and how UK travellers can avoid hidden fees on foreign transactions.

What Is Dynamic Currency Conversion (DCC)?

Dynamic currency conversion is a service offered by foreign merchants (e.g. shops, hotels, restaurants, ATMs) that lets you pay in your home currency (GBP) rather than the local one (e.g. euros or dollars). It may sound helpful, but it comes with a catch: you often get a poor exchange rate and added fees.

Example:

  • You’re in Spain and charged €100

  • Paying in GBP might show £91.50

  • But if you choose local currency, your bank may only charge you £87
    The difference is due to inflated exchange rates and service margins built into DCC.

Why Paying in Local Currency Is Better

  1. Lower Fees
    When you pay in the local currency, your bank or card provider handles the conversion, usually at wholesale rates (especially with cards like Monzo, Chase UK, or Wise).

  2. More Transparency
    You can later see exactly what you paid in pounds, using your own provider’s rates—typically closer to the interbank rate with no surprises.

  3. Avoid Hidden Margins
    DCC providers may mark up the rate by 3–6%, which can make even small purchases noticeably more expensive.

  4. You Stay in Control
    Banks like Revolut or Starling often notify you in real time of the exchange rate applied, helping you track your spending better.

When Might It Make Sense to Pay in GBP?

Almost never—unless:

  • You are using a very poor bank card with no free international usage

  • You want immediate visibility of the exact pound amount (even if it costs more)

  • You're using a card that doesn’t support foreign currency conversion at all (rare)

For 99% of UK travellers, choosing local currency is the better choice.

Card Providers That Help You Save

Some UK card providers offer fee-free foreign transactions:

  • Chase UK – No foreign transaction fees, competitive rates

  • Starling Bank – Uses Mastercard rate, no added fee

  • Monzo Plus/Premium – Fee-free up to a certain limit

  • Revolut – Great weekday rates, watch weekend markup

  • Wise – Multi-currency account with real-time rates

Cards from traditional banks (e.g. Barclays, Lloyds, HSBC) often add 2.75–3% fees unless you’ve opted into a specialist account.

Top Tips for Paying Abroad

  • Always select “pay in local currency” when asked at checkout or ATM

  • If using a cash machine, reject DCC even if GBP is the default

  • Consider using a travel-friendly bank card for lower fees

  • Turn on transaction notifications to keep track of live conversion costs

FAQs

What happens if I accidentally pay in GBP?
Your transaction will go through, but you'll likely pay more than necessary. Unfortunately, it’s usually non-reversible.

Is this only for card payments?
No—ATMs and some online checkout systems also use DCC. Always opt for the currency of the country you're in.

Does this apply to PayPal or Amazon too?
Yes. If buying from international sellers, PayPal and Amazon may offer to convert for you. Always compare their rate to your card provider’s.