Is it better to pay in local currency or GBP when you’re abroad?

Local currency or GBP? We've all been thrown off by the question on the card machine, so let's clear up the confusion.

Paying in local currency vs pounds abroad

You should always be given the option to pay in local currency or pounds. If you chose local currency but your receipt shows GBP, ask the merchant to void the transaction and try again.

Local currency - Pros

Competitive exchange rates via Visa or Mastercard mean it’s typically cheaper, especially with a fee-free debit card (be mindful that other fees may apply)
Easier to keep track of your spending.

Local currency - Cons

The final amount in pounds may vary due to exchange rate fluctuations
If your credit card charges a foreign transaction fee, this will still apply.

Pounds (GBP) - Pros

Easier to understand how much you’re spending if you’re more familiar with pounds
Could make sense if you want certainty in what you’re paying due to unstable or fluctuating exchange rates.

Pounds (GBP) - Cons

Higher chance of paying more due to poor exchange rates and added dynamic currency conversion (DCC) fees
Less transparency on how much you’re really being charged
Any debit or credit card fees for overseas use may still apply.

When deciding whether to use your debit card or a credit card overseas, here’s what to consider:

Debit card: With first direct, we don’t charge any fees for purchases or cash withdrawals abroad. This makes it a cost-effective choice in many cases
Credit card: Some credit cards (including first direct’s) charge a fee for purchases and cash withdrawals abroad, often around 3% of the transaction amount. This can add up quickly if you use it often

If you want to withdraw cash, some ATM operators might also apply their own fees. You’ll usually be warned before the transaction goes through—so you can cancel and find a cheaper option if you want to.

Debit card vs credit card

It’s important to know what fees you may be charged for each payment method, as these can vary by bank and product. This could make a big difference to your overall spend. Check with your provider before you travel. But, as a guide:

Local currency or GBP on your debit card?

It's usually better to choose local currency when paying by debit card to avoid being charged DCC. If you choose pounds it could cost you more than paying in the local currency. This is because card networks (like Visa or Mastercard) typically have competitive exchange rates that are closer to the market exchange rates.

Local currency or GBP on your credit card?

Choosing local currency on your credit card will also avoid DCC fees. But, you may be charged additional fees for using your credit card oversees. These fees can add up over the course of your holiday.

Not the snappiest of names we know, but it pays to know what it is. Dynamic Currency Conversion is when the card machine offers to convert your purchase into GPB on the spot.

You should always be given the option to choose between local currency and GBP when paying by card.

Bear in mind, while DCC can offer convenience it can come with higher costs due to different exchange rates and fees set by the merchant or ATM operator.

Spending money abroad can be confusing. Cards, cash, local currency, pounds… it’s a lot to weigh up. A little prep before you travel can save you a lot while you’re away. So, before you pack your bags:

compare payment options
decide what matters the most, convenience or paying less
check your bank’s card fees – visit our using your card outside of the UK page for more details
if you plan on taking some cash, order your travel money.

And one last thing, we don’t charge any first direct debit card fees on purchases or cash withdrawals abroad. That keeps things simple. Note that fees do apply when using your first direct credit card abroad.

Just watch out for ATM operators who might add their own charges - they’ll usually tell you before the transaction goes through, so you can cancel and find a cheaper option if you want to.

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Get your travel money

Order your travel money quickly and easily online. We offer home delivery too.

Order travel money

Fee free travel card

Spend and withdraw abroad with zero fees from us. Just pack your first direct debit card and go. Be mindful that other fees may apply.

Spending abroad explained

Current account benefits

We don't just offer fee-free spending abroad, discover all the other benefits of having a first direct current account.

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Should I pay in local currency or GBP FAQs

If I pay in local currency, do I avoid all fees?

Not necessarily. When you use a credit or debit card abroad, some banks charge separate transaction fees which usually have 1 or 2 parts:

the first and most common is a ‘non-sterling transaction fee’ which is normally around 3% and covers the cost of the currency conversion (if you choose to pay in pounds, you won't normally pay this)
the other is a standalone fixed fee of around £1.50 (or a percentage of the amount you’re paying which might have a minimum fee) whether you choose to pay in pounds or local currency.

These can add up quickly, especially if you're using your card for a lot of small purchases like drinks and snacks so it’s worth keeping an eye out for them.

Is there a way to avoid bank fees abroad?

Not every bank or product charges non-sterling transaction fees. We don’t charge fees when you use your first direct debit card abroad (for purchases or cash withdrawals), but you’ll be charged a fee for using your first direct credit card.

Shopping around and knowing what to expect is key, so make sure you do your research before you travel. This means there’s less chance of nasty surprises while you’re away and you can give yourself time to switch providers if you find one that suits you better.

Should I pay for cash machine withdrawals in local currency?

It's often cheaper to pay the fees for these in the local currency rather than converting them into pounds. If you do choose to convert, the Dynamic Currency Conversion fees will be applied (as explained above) so you could end up paying more than you need to.

Are there other ways to avoid cash machine fees abroad?

If you choose to pay in local currency, you're already avoiding one of the most significant charges but sometimes banks or retailers can apply other fees you're not aware of, for example:
if you choose a machine that's not part of your bank's international network. Some of the bigger banks have their own machines abroad but if not, they may partner with other banks to form a fee-free network so it’s worth checking this before you travel
some banks charge non-sterling transaction fees and a separate cash withdrawal fee, which can be a percentage of the amount you take out (or a minimum charge)
using a credit card to withdraw cash normally has an extra ‘cash advance’ fee, just like there is for doing this in the UK
most customers do take some Travel Money along with them too. Carrying cash can be handy for smaller purchases or for a visit to the local markets where local currency is always a preferred option.