A PERSONAL finance expert has warned travellers not to make this simple mistake when using your card abroad as it could cost you more.
Andrew Hagger, at Moneycomms.co.uk, advises holidaymakers to always pay in the local currency when paying by plastic.
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Holidaymakers are often given the choice between paying in pounds or euros when using a debit or credit card in Europe, either for withdrawing cash or in shops and restaurants.
Mr Hagger told The Sun Online: “Never pay in GBP when using your plastic overseas – always pay in the local currency of the country you are visiting.
“If you say yes to paying in pounds sterling it’s the equivalent of agreeing to an extra 5-10 per cent hit on your shopping, restaurant bill or cash withdrawal.”
He added: “Basically it means that the local retailer uses an inferior local exchange rate, rather than the fairer Visa or Mastercard international exchange rate.”
When you choose to pay in euros your bank or credit card company work out the currency conversion for you.
If you opt to pay in the pound then this calculation, known as the dynamic currency exchange, is left up to the foreign bank, shop or restaurants bank.
It means you could end up paying a much worse rate.
The common mistake has previously been highlighted by money expert Martin Lewis.
Financial experts are expecting the pound to decline in value this year, a report from Bloomberg indicates.
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Bank of America Corp. strategists have warned of “existential” risks to sterling amid an ongoing cost of living crisis and struggles in the wider global economy as the war in Ukraine continues.
RBC Capital Markets predicts the pound will slide by 13 per cent by the end of the year to $1.10 while the euro will surge to 91 pence
“The market has to go much further in pricing out BOE hikes as the pendulum swings from inflation to weaker growth,” Adam Cole, chief currency strategist at RBC, told Bloomberg. “Longer-term, sterling is significantly overvalued in real terms and we still have concerns on UK financial imbalances.”
The pessimistic outlook comes after the Bank of England has introduced four interest rate increases since December and the markets are expecting there to be further rises in the future.
A weaker pound would mean less spending power for holidaymakers when abroad.
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