Martin Lewis confirms whether you should spend in pounds or euros on holiday | Personal Finance | Finance
Martin Lewis had his say on whether Brits should spend in euros or pounds on their holidays – and it might not be what you expect. Summer is upon us, with many households eyeing up a well-earned overseas break to soak up some sun and sea air.
But any experienced traveller will tell you that working out your budgets and ensuring you don’t get stung by fees when paying for things is crucial for keeping the overall cost of your trip down. When you’re taking money out from a hole in the wall, you may be presented with the choice of paying in sterling or the local currency. On the face of it, paying in pounds gives you a better sense of the value of what you’re taking out or paying, but the automatic conversion may actually add to your costs.
This is due to retailers and ATMs’ use of what’s called dynamic currency conversion (DCC), in which they apply their own exchange rate to convert the amount of local currency you wish to withdraw into sterling, often charging well above the standard rate, Manchester Evening News reports.
Mr Lewis, a personal finance guru and founder of MoneySavingExpert.com, discussed the pitfalls of this in an appearance on ITV.
He recommends getting an overseas specialist card that gives you a “near-perfect” rate, meaning you’ve got some protection.
Mr Lewis explained: “If you go to a machine abroad or an ATM, and you’re in Europe, it says do you want euros or pounds, what it’s actually saying is if it’s euros, do you want your card to do the conversion, your card company. If it’s pounds we will do the conversion for you and then charge your card.
“Now, we’ve just talked about getting a specialist overseas card that gives you a near-perfect rate. Well you want them to do the conversion, that’s why you got the specialist overseas card.
“And actually, even if you haven’t got a specialist card, even the bog standard, pretty pants cards here tend to be better than the shop abroad doing it, where they put a massive wodge – it can be 6% or 7% on the exchange rate.
“The same with overseas cash machines, which could also add a fee on top. But what happens is basically, let’s say you’re at a cash machine abroad and it’s saying pounds or euros, and you say, as I will absolutely do, I want euros, please.
“And it says, ‘Are you sure we won’t do the conversion?’ Yes I want euros. They are desperate to persuade you to let them do the conversion because they make a lot of money from it.”
“So very simply, if you’re in Europe and you’re paying on a card, pay in euros. If you’re in America, pay in dollars,” he added.
