Using plastic overseas? Always PAY IN EUROS (even if it says 0% commission)

Update 16 July 2024: I wrote this blog back in 2013, and uploaded a newer video in May 2022, so while the text is a little dated, and the rates in the video are slightly wrong, the logic is still exactly the same.

I couldn't believe my ears. While filming in southern Spain for the new series of my show, the producer told me he'd found a cash machine offering 0% commission if you chose to withdraw in pounds. In theory, that'd mean PERFECT exchange rates.

I checked, and indeed the screen said just that. Yet I smelt a rat. However before we get into that, let me just give you the crucial definitions:

Use a debit or credit card in Europe, either for cash from an ATM or in a shop, and you are sometimes given a choice between…

  • Paying in euros. As you're charged in euros, your home bank or credit card company does the conversion for you. Typically this is at the Visa/Mastercard exchange rate (which is, basically, perfect) plus a 3% load – so £100 worth of euros costs you £103. However, if you have one of the specialist cheap travel credit cards, which are load-free worldwide, £100 of euros costs £100.

  • Paying in pounds. This choice is known as 'dynamic currency exchange'. What it means is when paying or withdrawing cash on a card, you can opt for the conversion on the hoof. In other words, rather than your home bank, the foreign bank (or the store's bank if you're buying something) does the currency conversion for you.

Video recorded May 2022

Why you should always pay in the local currency!

(This is a new video, not the one spoken about from 2013)

Martin shows you why it's so important to pay in the local currency
Embedded YouTube Video

Turn on subtitles by using the closed captions icon in the bottom right.
Clip taken from The Martin Lewis Money Show Live Special which aired on 24 May 2022. With the kind permission of ITV Studios. All rights reserved.

When 0% commission is NOT 0% commission

After my producer's enthusiasm I decided to investigate and and do some calculations. I took a picture of the screen:

Banca March ATM withdrawal screen

While it sounded good, the rate didn't look special. Yet then I noticed the key phrase:


So this isn't the super-duper Visa/Mastercard wholesale rate, it's the bank's own wholesale rate, and frankly, that's a pile of pants. It's made its profit in the underlying rate, so no wonder it can then say it's 0% commission.

On that day it was charging £91.50 for 100 euros. But if you'd actually got it at the perfect rate on the day, it would've been £86.50 – a huge difference, even on a relatively small withdrawal.

So I went to the nearest cash machine I could to see how consistent this was.

Banco Sabadell ATM withdrawal screen

This one, Banco Sabadell, is again using its wholesale rate – then adding 2.5% commission on top. Yet even with that, it's still cheaper at just £89.15 for 100 euros.

Then, purely for research's sake, obviously, I went to a restaurant I knew offered the option to pay in pounds or euros…

Restaurant rate

This one was based on the "Visa wholesale rate" but with 3% commission. Yet its overall rate was therefore identical to Banco Sabadell, with its 2.5% commission on its own rate.

The best way to pay or withdraw cash abroad

So, to wrap it all up, I did a few more comparisons on the day, just to prove exactly how it works. Here's my table:


  Paying in? How much you'd get
SPEND on load-free specialist overseas card Euros €115.60
ATM withdrawal from ANY Spanish bank with specialist overseas card Euros €115.60 + your card's fee, usually £1-£3
TravelMoneyMax best bureau de change rate, for collection (London) N/A €114.70
ATM withdrawal from Banco Sabadell Pounds €112.20 + your card's ATM fee, usually £2-£3
ATM withdrawal from ANY Spanish bank OR spending using a typical UK debit or credit card Euros €112.10 + any card's fees for ATM withdrawals (most credit and debit cards)
TravelMoneyMax best bureau de change rate, for delivery N/A €110.60 (get out more money and as the delivery fee has less impact the rate is relatively better)
M&S collection rate N/A €110.60
Withdrawal from Banca March at '0% commission' paying in pounds Pounds €109.30

Table based on a day with Visa wholesale rate at £1 = €1.156.

Therefore the rule is simple

If you have, or get, a specialist overseas card, then there is no doubt that using it and paying in euros is always correct (though do ensure you repay in full to minimise the interest).

Yet even without one of these, if you're using your plastic abroad, while the chart shows with one bank there's a very minor gain for paying in pounds – it's negligible. Whereas get it wrong, and you can lose out a lot. So for safety and simplicity's sake, the golden rule is:

If using a card and you’re asked whether you want to pay in pounds or pay in local currency (eg, Euros) ALWAYS say the local currency (the same almost certainly applies US dollars when in the States or other currencies elsewhere too).