Always deal in local currency when on holiday

Ruth Jackson with a foreign-exchange sting to avoid while on holiday. Plus three tips to save you money.

We mentioned some weeks ago a new trick to part you from your money when you're abroad, whereby businesses offer to charge you in sterling rather than the local currency, but sting you with a terrible exchange rate. Known as dynamic currency conversion (DCC) it is now appearing at cash machines in Spain.

Take cash out on your Spanish holiday and you will be confronted by a message asking whether you want to be charged in GBP rather than Euros, and giving you a 'yes' or 'no' option. Now either way you will end up with euros it's just a case of how much those euros will cost you. If you choose 'yes' and are shown how much you are withdrawing in sterling, you will be stung. "The exchange rate is poor and the conversion fee high, with profits funnelled back to the retailer," warns Patrick Collinson in The Guardian. Just say 'no' and stick to dealing in local currency, both at the cash machine and when paying in shops. It may not seem as convenient, but it will save you valuable pounds.

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.