Paying abroad: currency, fees and a backup plan

Most surprises when paying abroad come from a few small choices at the till: which currency to pay in, which card to use and what happens to the money afterwards. A little preparation removes most of them.

Choose the local currency at the till

When you pay by card abroad, the terminal or ATM may ask whether you want to be charged in the local currency or in your home currency. The home-currency option is called dynamic currency conversion. The shop's bank sets its exchange rate, and the offer can include a markup and extra fees. If you choose the local currency instead, your own card issuer converts the amount, using its own rate and fees.

Visa and Mastercard require merchants and ATMs to show you both amounts, the exchange rate and any extra fee, and to let you choose. Visa adds that if you cannot see those details, or you feel pressured, you should decline the conversion and tell your card issuer. Declining does not stop the purchase or the withdrawal.

The usual advice follows from this: decline the offer and pay in the local currency, then check your own card's rate and fees. If the screen shows both totals and the rate, you can compare them before you decide.

Know what your card charges

Look up three things for each card you will take.

• The foreign transaction fee. Many cards add a percentage to purchases made in another currency. Some cards charge nothing.
• ATM costs. A cash withdrawal can carry a fee from the ATM's owner and another from your own bank.
• The exchange rate. When you pay in the local currency, your card issuer sets the rate and any markup.

You will find all three in your card agreement and usually in your bank's app. A card with no foreign transaction fee avoids one charge, but it does not protect you from the extra cost of a conversion offer you accept at the till.

Carry a backup

One card that fails can be a real problem far from home. It may be blocked, lost, damaged or simply not accepted.

• Take two cards, ideally from different issuers, and keep them in different places.
• Add a card to your phone's wallet too, if you can, so you can pay by tapping.
• Not every card network is accepted everywhere, so check each card's network against where you are going.
• Carry a little cash in the local currency for small shops, markets and transport.
• Keep your bank's number for lost cards where you can reach it without the card. Never write card numbers or security codes in a note.

Expect holds at hotels and car rentals

Hotels and car rental companies often place a temporary hold on your card, which lowers your available balance until it is released. Make sure the card you use has room for it, and read the rental company's card rules, for example whether it accepts debit cards, before you arrive.

Before you leave

• Check that no card expires during the trip, and that each card works abroad and online.
• Look at your bank's app for travel settings. Some banks want a travel notice, and many do not.
• Make sure you can still receive login codes. The eSIM guide explains how.
• Read what your card's travel benefits require. Some only apply if you paid for the trip with that card.

If something goes wrong

As soon as you notice a lost or stolen card, freeze or report it in your bank's app or on its lost-card number, then switch to your backup card. Keep your receipts until your statement shows the right amounts.