How to Use This Tool
Enter a purchase and the real exchange rate. The two boxes show what each choice costs, and the difference is what saying "no" is worth.
What the machine is really asking
When a terminal abroad offers to charge you in your home currency, it is offering to do the currency conversion itself rather than letting your card network do it. That is dynamic currency conversion, and the rate it uses is set by the merchant's payment provider with a margin on top — typically 3% to 7%.
The pitch is certainty: you see the exact amount in your own currency before you approve it. That is true, and the amount you are seeing is a worse one. Certainty about a bad number is not worth paying for.
Why the fee applies either way
This is the part that makes the answer unconditional. Many people reason that paying in their home currency avoids their bank's foreign transaction fee, since the charge arrives already denominated at home.
It does not. Card issuers apply the foreign transaction fee based on where the transaction was acquired, not what currency it arrived in. So a DCC transaction is usually charged the fee anyway — you pay the merchant's margin and your bank's fee, where declining DCC means paying only the second.
The rule
Always choose the local currency. There is no situation where DCC is cheaper — the margin is added by definition. If you are in Japan, pay in yen. In Spain, in euros. The card network converts at close to the interbank rate, which nobody at the counter can beat.
Practical notes:
- It can happen without asking. Some terminals apply DCC by default and only show a receipt afterwards. If your receipt shows your home currency and an exchange rate, that is what happened.
- You can usually reverse it at the counter before the transaction completes. Ask the cashier to run it again in local currency; they can.
- Cash machines do it too, often more aggressively, and the wording is the same. The "with conversion" option is the expensive one.
- Online retailers do it as well. A site offering to bill you in your home currency is the same arrangement.
Your card's own fee is the other half
Declining DCC does not make the transaction free. Your issuer's foreign transaction fee — commonly around 2% to 3%, and 0% on cards aimed at travellers — still applies. That fee is worth checking before a trip, because on a few thousand of spending the difference between a 0% card and a 3% one is larger than most people's expected savings from anything else they will do.
