Paying on card? Do the maths and pay local

IF you’re heading off on your holidays then the chances are you’ll be using a debit or credit card when you’re away. And Money Saving Expert Martin Lewis has shared a tip to help you get the best deal when you do.

His advice for using plastic abroad is simple and clear - always pay in Euros.

When using your card in a shop or ATM abroad you are given a choice between paying in euros or paying in pounds.

On his blog Martin says if you pay in euros your home bank or credit card company does the conversion for you.

Martin said: “Typically this is at the Visa/Mastercard exchange rate (which is, basically, perfect) plus a three per cent load – so £100 worth of euros costs you £103.

“However, if you have one of the specialist cheap travel credit cards, which are load-free worldwide, £100 of euros costs £100.”

Paying in pounds is known as ‘dynamic currency exchange’.

Martin explains: “What it means is when paying or withdrawing cash on a card, you can opt for the conversion on the hoof.

“In other words, rather than your home bank, the foreign bank (or the store’s bank if you’re buying something) does the currency conversion for you.”

The foreign bank rate is usually worse than your home bank, meaning you pay more in the long run.

Martin’s advice is clear, as he said: “If you have, or get, a specialist overseas card, then there is no doubt that using it and paying in euros is always correct (though do ensure you repay in full to minimise the interest).

“If using a card and you’re asked whether you want to pay in pounds or pay in local currency (eg euros) ALWAYS say the local currency (the same almost certainly applies US dollars when in the States or other currencies elsewhere too).”