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 subscribing. It’s free, and you’ll get
notifications on all our new updates. In addition, check out our “Travel Tips”
playlist for more videos like this one. Until next time, travel safe and travel smart.