Dynamic Currency Conversion (DCC) allows Visa or Mastercard holders travelling abroad to pay for purchases using their card’s ‘home currency’ rather than local currency. But that convenience often comes at a price. 

If you do opt to pay in your card’s home currency, the merchant will convert the amount to pounds for you. For UK cardholders, that would mean paying a bill in pounds rather than Euros in a cafe in Madrid, for example.

While it may seem more convenient, this creates three ways you can be stung with extra costs:

1.) Exchange rate

The obvious one. You’re hardly going to get the Mastercard exchange rate and this is a great opportunity for the provider of the DCC (be it the merchant or their third party credit card processor) to add a hefty markup to your bill.

2.) Processing fee

Like any good service, the option to use DCC may be accompanied by a processing charge. However, in order not to complicate things, the merchant/card processor may choose not to disclose this fact to the customer and will just slip it into the final amount displayed onscreen.

3.) ‘Regular’ foreign transaction fees

And here’s the most frustrating catch. As a UK cardholder, you may assume that having chosen to pay in pounds, your purchase would at least be treated in the same way as a sandwich from your local Pret. However, many card companies charge you just for using your card abroad. There’s no requirement for that transaction to be in a foreign currency.

DCC is not limited to in-store purchases either. Some ATM’s will offer you the choice when withdrawing cash and various websites will do the same.

You don’t even have to be abroad to be caught out by DCC

A friend of mine was pricing up a trip on Ryanair and flagged up a DCC pothole on their website:

Here’s a trip from Malaga to London Luton in August:

DCC Ryanair example

The price for a one-way journey is €218. When you arrive at the payment page, you’ll see a number of payment options, including the ability to choose which currency to pay in:

DCC Ryanair example 2

Many people are aware that their cards charge extra for transactions made in a foreign currency and might be tempted by Ryanair’s offer to:

Select your home currency to avail of Ryanair’s guaranteed exchange rate or your card issuing currency.

As you can see, I was offered a choice between paying €218 or £208. Except at the time of writing, exchange rates put €218 worked out as £195. Choosing to pay Ryanair in pounds would cost me an extra £13 compared to paying in Euros using a card which has no foreign exchange fees.

I’m not suggesting Ryanair are alone in offering this dubious exchange rate, they were flagged to me by a friend – please do highlight other airlines/hotel chain websites that offer similar options in the comments section below.


Bottom line = always ensure a vendor is charging your card in the local currency. Plus, watch out when paying online and the provider offers to convert a foreign currency purchase into pounds. More often than not you’re likely receiving a very poor conversion rate.

Having ensured you’re paying in the local currency, you’ll also want to avoid the ~3% fee that most companies charge for using your debit/credit card abroad. This article looks at the best cards to use abroad to avoid foreign transaction fees.

Have you ever been on the wrong end of Dynamic Currency Conversion?

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