The payment mistake that can cost you hundreds when travelling overseas
Every week, 9Travel shares a top travel tip from our readers or something our writers find. Have something to share? Email us at travel@nine.com.au for a chance to be featured in an upcoming story.
Picture this: you're sitting in a cozy local trattoria in Italy, your tummy full of the best pasta you've ever eaten, and a couple of glasses of wine under your belt.
The waiter comes over with an EFTPOS machine for you to pay, and the screen offers you a choice: "Pay in Euros or Pay in AUD."
You might reflexively hit 'AUD' as it's your home currency, but doing so could end up costing you a lot over the course of your trip.
Paying cash is the easiest way to avoid getting hit with bank fees. Getty Images/iStockphoto
This pop-up is called Dynamic Currency Conversion, and it's a practice that trips up many travellers when they're overseas.
If you choose to be charged in AUD, then the exchange rate is set by the merchant's bank or processor. And it's almost always going to be unfavourable for you.
READ MORE: These are the longest cruises in the world you can book now
You're likely to pay an extra three per cent to eight per cent on the exchange rate if you choose to pay in AUD rather than the local currency.
That could just be a few cents on a cup of espresso, but the more you spend, the more that extra fee will go up.
READ MORE: Flight attendant condemns in-flight act you might not realise is 'super rude'
Don't get hit with sneaky fees. Getty
Here is the golden rule, for any time you're overseas and paying by card: always choose the local currency.
If you're in Rome, pay in Euros. If you're in the US, pay in US dollars. If you're in Thailand, pay in Baht.
That way, you're using your home bank's currency conversion rate, which will be much more competitive and transparent - often very close to the market rate.
Be careful when withdrawing cash, too. Getty
When you're withdrawing money from an ATM overseas, you could also be hit by dynamic currency conversion.
ATMs often display a "guaranteed" conversion rate and ask if you want to accept it. Again, this is the local bank setting their own rate, which is rarely to your benefit.
If you decline, you'll use your own bank's conversion rate, which is likely to be far lower than the ATM markup - especially if you're withdrawing a significant amount of cash.
When in doubt, remember this: pay in the local currency.
Drop us an email with all your wisdom to travel@nine.com.au, and your tip could be featured in an upcoming story on 9Travel.
Supplied
