Hi there, it's Ernest from Trip Astute. In this video, we're going to be discussing
why it's always better to pay in local currency, especially when paying with a
credit card.
(light chiming music)
So you're traveling in Mexico and you decide to buy some souvenirs or a meal using your credit card.
When you hand over your card, you're
asked by the clerk, "would you like to pay in pesos or dollars?" While it may seem
convenient to pay in dollars, you shouldn't and here's why. When you allow
the clerk to process the charge in dollars or the respective currency, then
you're accepting the exchange rate set by the merchant. This is generally set at an
unfavorable rate. Merchants will often inflate the exchange rate resulting in
you paying more for the item or service. If the charge is processed in the local
currency, then the bank will convert the price at the standard daily rate. This is
generally the best rate that you will find. It's also the same rate used by the
ATMs, which is why you should always get your cash there rather than a currency
exchange booth. For more info, check out one of our earlier videos on the topic
called "Getting Cash Abroad". The same rules apply for cash. You generally get
better prices if you pay in the local currency, so definitely keep that in mind
when given the option. In addition, here are some tips to help you save money
when paying for things abroad. Number one: Use a credit card with no foreign
transaction fee. If you're using a credit card abroad, then you should be using one
that does not charge a foreign transaction fee. Most premium cards like
the Chase Sapphire cards, American Express Platinum, and Citi Prestige card
have this feature. Some issuers, like Discover and Capital One, do not charge a
foreign transaction fee on any of their cards. If you're unsure, then make sure to
contact your issuer to verify. Number two: Carry a Visa and MasterCard. While many
merchants are starting to accept American Express, most will only take
Visa and MasterCard. If you primarily use American Express, I
was suggest carrying a secondary Visa or MasterCard just to be safe. Also, my
experience with other cards like Discover, JCB, and Diners Club tend to
have very limited acceptance while traveling, especially with smaller
merchants. Number three: Get an ATM card that reimburses your fees. We also covered
this in the "Getting Cash Abroad" video. Certain banks reimburse you for any ATM
fees incurred, even when abroad. One such bank is Charles Schwab and
their High Yield Checking Account. It's free to open and they'll reimburse
all your fees. I like to use it as well since it's not my primary checking
account, so if it gets compromised, I won't lose all the money in my primary
account. I usually just load it up before my trip and keep my primary debit card
with my passport in the hotel safe. I'll include a link to the Charles Schwab
High-Yield checking account in the video description below.
Number four: Break your large bills. When you get money from the ATM, you will
generally get large bills. This makes it complicated to pay for taxi transactions
or tips. I suggest asking your hotel concierge to
break the bill as soon as possible or paying restaurants or merchants with the
larger bills in order to get the smaller notes. However, don't be surprised if
smaller vendors aren't able to break your bills.
Number five: Download a currency exchange app when traveling internationally. It
can be tough to make the conversion in your head.
Luckily, there are a ton of apps that you can use to make the conversion quickly
and efficiently. Most of these apps can pull the latest
exchange rate too. And those are our travel tips for this video. Do you have
any experiences or tips on paying in local currency? If so, please share them
in the comment section below. Also, let us know if you have any questions. If you
enjoyed this video or found it useful, please hit the "like" button and consider
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In addition, check out our "Travel Tips" playlist for more videos like this one.
Until next time, travel safe and travel smart.