Keeping on top of card expenses abroad

Gino Ravaioli is chairperson of the DCC Forum

Any frequent and experienced business traveller knows that keeping track of expenses can end up being a big drain on time if not prepared for properly in advance.

When you’re on the move, finding time to properly submit a complicated list of expenses can be extremely difficult, not to mention the last thing you want to do with your precious down time.

So if you’re frequently travelling abroad on business, you’ll understand that using a debit and credit card is pretty much essential to keep track of payments and expenses unless you want to spend your first day back at work bogged down with paperwork.

You will also probably have noticed that when using your card abroad, you are usually presented with two options – whether to pay in pounds or in the local currency.

The questions are then, what are the differences between these and is there any compelling reason to choose one over the other?

Essentially, the choice that you make will change the various fees applied and how and when these fees are applied.

If you choose to pay in the local currency then the amount displayed will be the cost of the transaction before any additional fees are applied. You will also then be charged a non-sterling transaction fee by your bank or your card provider.

You should therefore be aware that the amount in local currency will most likely not be what is charged to your bank account and what will appear on your bank statements – a problem for those keeping a close eye on their expenses and budget.

Alternatively, the choice can be made to pay in pounds, in which case non-sterling transaction fees from your bank or card provider are waived, and replaced by a process called Dynamic Currency Conversion, or DCC.

When choosing DCC, the amount quoted at payment will be exactly what is removed from your account as it already includes the DCC fee within it. Additionally, you won’t have to make a rapid and rough currency conversion in your head, and you benefit from more transparency as the conversion rate being applied is known at the point of purchase.

By choosing to pay in pounds, the expensing process can become easier as the amount on the receipt matches exactly the amount on your bank statement, reducing the chance of accidentally exceeding your pre-assigned budget.

Therefore, before you travel abroad next, make sure you take into account the following top tips when using your card abroad:

1. Familiarise yourself with current exchange rates

It sounds so simple, but a surprisingly large number of us simply don’t do it. This can help you to keep to a budget, but also to help inform your decision on whether to pay in pounds or in the local currency.

2. Check your card issuer’s fees before travelling abroad

Even for those of us who always check currency exchange rates before heading to the airport, the vast majority still won’t check the fees which our card providers will charge us when abroad. These make just as much of a difference to how far your travel budget will go and you should make sure you check before you leave.

3. Be aware of your options at the point of transaction and don’t be afraid to ask questions

Always consider whether or not it would suit you best to pay in the local currency or in pounds and be aware of additional charges which will not be quoted at the point of payment when paying in local currency. Also, be aware of additional charges from card providers which will not be visible during payment and which could have an impact on your budget and the ease of filing your expenses. If you’re in doubt, you shouldn’t hesitate to ask about your options before you commit to your purchase.

We hope that with more education around the options available when using your card abroad, those travelling on business can make an informed decision which is right for them.

Travelling on business is already stressful enough. Understanding the options can circumvent the use of your card abroad becoming your next headache. 

Read our contributor biography of Gino Ravaioli

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  • SGJNI1961

    The fairly new “credit card” from Travelex called “Supercard” should sort matters out most of the time. Pay in any one of the accepted currencies and there are no card fees when the transaction is applied to your nominated UK credit card and there is an App which keeps you up to date with your spending in more or less real time, showing both the local amount, UK conversion and the approx amount saved in fees. I have been using it all summer, admittedly only in the USA and R o I, but it has worked almost perfectly, being refused once at a petrol station. Well worth a look.

  • Travelfoot

    The amount offered for payment in sterling may well be the end figure applied to the credit card account but it is not necessarily fee less or profitless rate in favor of the cardholder. However, cards issued by Santander namely ZERO and the Post Office credit cards apply no fees and the exchange rate applied is the prevailing inter-bank rate. Paying in local currency still appears in Pounds with currency amount and the rate. I closely monitored Canadian dollar exchange rate last month and noted the charges applied to my Post Office Master Card account for my Canadian purchases were the same as the inter-bank rate of the day.

  • marcoelser

    DCC has been around for quite some time… Mr. Ravaioli does note explain entirely all the benefits that accrue to this technology. When a merchant charges a client for a transaction, the merchant pays a fee (anywhere from 2 to 5%) on the amount charged to the client. The merchant’s bank keeps this money. The client’s bank then charges the client for the FX conversion…

    A company called Planet Payment was one of the first to see this opportunity and has made huge inroads. The fees paid by the client and merchant are often a lot less than those above. Everybody wins besides the greedy banks…