When traveling outside of your home country, figuring out how much things cost in relation to your currency can be difficult. You need to know the current conversion rate between the two currencies and then apply that to the purchase price. Sometimes, you can eyeball the price when it’s a simple ratio. For instance, as of January 2025:
The exchange rate for the US Dollar to Japanese Yen (USD/JPY) is 1 USD = 156.51 JPY. If you were buying something that costs 1,500 Yen, that’s roughly $10:
Similarly, the exchange rate for the US Dollar to British Pound (USD/GBP) is 1 USD = 0.80 GBP. If you see something that costs £100, that’s approximately $125. Think of everything as about 25% more expensive than it looks:
Meanwhile, the exchange rate for the US Dollar to Thai Baht (USD/THB) is 1 USD = 33.57 THB. For every 1,000 Baht, you’re spending about $30. Try keeping that math in your head all the time:
Sometimes, however, conversions aren’t so straightforward. Imagine a hotel, restaurant, or gift shop asking if you’d like to pay in local or your home currency. If you’re tired of doing math, you might jump at the chance to pay in your local currency, right?
However, If you ever get this question, ALWAYS PAY IN LOCAL CURRENCY!!!
What is Dynamic Currency Conversion (DCC)?
The service offered is called Dynamic Currency Conversion (DCC), and it’s a total ripoff. The merchant converts the purchase charge to your home currency at an exchange rate of their choosing. This is almost always higher than the currency exchange rate that your bank or credit card would use. If you think this will save you money by avoiding foreign exchange fees, you’re mistaken. That fee is charged for any transaction outside your home country, regardless of the currency used.
I know about this, yet a restaurant we visited in the United Kingdom still tricked me into paying in USD instead of GBP.
Why You Should Avoid Paying in Your Home Currency
Despite what the receipt says, we were never offered a choice of currencies that we remember. It was likely listed on the payment device where we inserted our card to pay the bill.
I used to think this ripoff was only used to overcharge Americans traveling abroad. However, I’ve learned that US merchants also use this scheme to overcharge visitors from other countries.
Tips for Maximizing Your Travel Spending
No matter where you’re from, here’s what you need to do:
- Always make your purchases in local currency.
- Use a credit card that has no foreign exchange fees.
If you’re from the US and traveling abroad, many cards have no exchange fees. If you are traveling from the UK, you also have several options with no foreign transaction fees.
Using a credit card can be advantageous while traveling abroad since the transaction cost will be converted at the bank’s exchange rate at the time of the transaction. The exchange rates banks charge each other are typically more favorable than those offered by local currency exchange services. By using your credit card, you’re likely to get a better rate and save money.
For the most accurate and up-to-date rates, consider using reliable currency converters like OANDA’s Currency Converter or XE Currency Converter.
The Bottom Line: Always Pay in Local Currency
So, if you remember just one thing when traveling overseas (or buying something in a foreign currency), ALWAYS pay in local currency!
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