Should You Pay In Your Own Currency or Local Currency?

The Flight Detective
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Booking travel online direct with vendors means you will often pay in a foreign currency. This is a relatively new phenomenon as previously you would have paid your local travel agent in your local currency.

A recent trend is for web sites to present the option for you to pay in your local currency rather than the currency of the place you’re booking. You also get this option on some point of sale machines when abroad. What should you do?

A Recent Example

Qatar Airways discounted flights from Stockholm in a recent sale and the service to Auckland was particularly well priced. I decided to go ahead and make a booking. The price came to 18,247 Swedish Krona which the currency conversion web sites said was about €1,920.

The amounts presented on these sites are always slightly less than what you will actually be charged. This is because they take an average exchange rate and don’t factor in any fees your bank may charge.

At the payment stage I had the option of paying in Swedish Krona or Euro with the Euro price displayed as €1,972.77. Someone once gave me the advice never to pay in your home currency in a situation like this as you would ultimately pay more.

I have always found this to be true. In this case, I paid in Swedish Krona and the amount that hit my credit card was €1,950.42. This is €22.35 less than the price offered at the booking stage. While it does not seem much in the overall scheme of things, I would rather spend it on something else rather than hand it to a credit card company for no reason at all.

Overall Thoughts

Finding out how much things are in your own money is relatively easy thanks to online currency conversion web sites. These will give you a general idea about how much will actually be debited from your credit card. Whether you will save money by paying the foreign amount or the amount presented in your home currency will depend on the fee structure at your local bank.

In my case, the option to pay in my home currency is always a higher amount than what has appeared on my card after paying in a foreign currency. I would suggest investigating it yourself as the money is certainly better in your own pocket than some financial institutions!

Thank you for reading and if you have any comments or questions, please leave them below.

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Featured image by Masakatsu Ukon and Qatar image by Curimedia via Wikimedia Commons.

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Mary Jane E Clark

Thanks for the info.

Flight Detective

You’re welcome!

Lee Huffman

I think you should always pay in the local currency with your credit card because the bank will often give you the best exchange rate. When a hotel, airline, restaurant, etc. charges you in your home currency, they will build in a profit or fees into the transaction costing you additional expense.

Flight Detective

I completely agree with you. It is a shame people are not educated on this before being surprised with the “Do you want to pay in your own currency?” question. Thanks for the mention too!

DaniLew

So true. At a jewelry store in MX, the salesman offered a “bigger” discount if paid in USD on Credit Card. I shook my head at the potential buyer but they were already agreeing to it without asking anything.

Flight Detective

That’s very cheeky, but I guess it’s all part of capitalism at the end of the day!

BatSheva

Depends on the % of the “bigger” discount. In your Qatar example you saved 1.15%. If the discount was more than that it might well have been worth taking.

Flight Detective

Very true, very true!

[…] Should you pay in your own currency or local currency? – I think you should always pay in the local currency with your credit card because the bank will often give you the best exchange rate.  When a hotel, airline, restaurant, etc. charges you in your home currency, they will build in a profit or fees into the transaction costing you additional expense. […]

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