Why You Should Pay in Local Currency Overseas

After hundreds of days traveling abroad, I want to teach you why you should always pay in the local currency when using your credit card overseas. Read on below to learn about this travel tip that will definitely save you money.

Pay in Local Currency When Abroad

When you understand why you should pay in the local currency when abroad, you will probably never make the rookie mistake of paying in your home currency again.

Many times when you travel to a foreign country, you have the option to make a credit card purchase in the local currency or in your home currency. In other words, before completing your credit card transaction in a store, you often times have to choose your payment currency. As an American, for example, your choices would be to pay in the local currency or USD.

Always, always choose to pay in the local currency.

The reason you want to always pay in the local currency is to avoid allowing the merchant’s credit card processing company to decide on the exchange rate.

More times than not, your credit card company will give you the best foreign exchange rate. As long as you have a reputable credit card, you should choose the local currency versus your home currency.

If this doesn’t quite makes sense yet, let’s take a look at a real world example from my travels.

Example Using Credit Card Abroad to Pay in Local Currency

During a layover in Iceland, I bought a sandwich wrap from the Reykjavik Airport. The price of the wrap was 990 ISK where Icelandic Króna is the local currency in Iceland.

When I went to pay for my wrap, I had the option to pay in ISK or USD. I had to make a decision—pay 990 ISK or $8.85 USD. Local currency vs home currency option on a credit card terminalPin

Most people would probably be tempted to pay in US dollars; however that would be a big mistake. Knowing that paying in the local currency would save me money, I chose to pay 990 ISK for my wrap.

Although I paid in the local currency of Icelandic Krónas, my credit card company converted this transaction into US dollars using a fair exchange rate at the time of 116 USD/ISK.


Minutes later, I checked my credit card transactions online. I ended up paying $8.53 for my wrap rather than the suggested $8.85 USD from the credit card terminal.
Credit card transaction after paying in local currencyPin

Because I wanted to educate others on how to use their credit card abroad, I decided to include this travel tip in my daily travel vlog which you can watch below.

YouTube video

Avoid Foreign Transaction Fees

All this goes without saying that you should obviously make sure that your credit card doesn’t charge foreign transaction fees to begin with. I use the Chase Sapphire Reserve credit card which does not have any foreign transaction fees.

As long as you have a foreign transaction fee-free credit card, you should also be buying your flights in the airline’s home currency.

What’s your biggest travel tip? Let me know in the comments below.

Meet Tony

After years of backpacking the world solo, Tony is an expert when it comes to budget travel. Discover why Tony quit his job to travel on the cheap, and follow him on YouTube for all the latest.

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