Tips to Follow When Buying Products and Services in Foreign Currencies

Whenever you are abroad and the country where you’re at has a different currency than your home currency, you will need to keep a few things in mind. The same applies when you’re buying online from a website that shows its prices in a different currency than your home country.

To give some practical examples, if you’re from a Eurozone country and you are shopping in the UK, the advice below will apply to you. The same holds true if you’re a Eurozone resident and are buying products from a UK-based website such as Amazon.co.uk.

• Your local bank will use its own exchange rates and charge you a currency conversion fee for every transaction (purchase) you make. Avoid such charges and get better rates by using the Revolut card. Revolut will give you the real exchange rate with no surprise fees when you spend or send money globally.
• Always pay in local currency whenever the choice is given. Many business owners and ATMs participate in a practice called DCC, Dynamic Currency Conversion. With this (anti-)service, the payable amount is being converted to the card’s currency. This usually comes at a premium of 4-5 percent. Advocates of DCC argue, that this is an extra service, so the cardholder would know the final price in their familiar currency.

Notes on using Revolut abroad

Sometimes when you use an ATM abroad, you will be asked to choose between a ‘credit’, ‘checking’ or ‘savings’ account. You should always choose either a ‘checking’ or ‘savings’ account.

If the ATM (or card terminal) asks whether you would like to complete the transaction ‘with conversion’ or ‘without conversion’, you should ALWAYS choose ‘without conversion‘.

As a rule of thumb, you should always opt to be charged in the local currency of the country you’re in! If you’re in Thailand choose Thai Baht, in Spain, Euros or in the United States, Dollars.

If you choose ‘with conversion’, the merchant or ATM provider can apply their own exchange rate. This rate usually has a mark-up on the interbank rate, enabling the ATM provider or merchant to make a profit on your transaction.

ATM withdrawals are free up to £200 (or currency equivalent) per calendar month. A 2% fee applies thereafter.

Currency conversion is done at live interbank rate with no fees up to £5000 (or currency equivalent) per calendar month. A 0.5% fee applies thereafter. At the weekend (Friday 00:00 – Sunday 23:59) Revolut applies a small mark up on the spot rate as the Forex markets are closed. They take the rate from Friday 00:00 and apply a 0.5% mark up on major currencies and 1.0% on other currencies to protect the company from potential losses due to a large fluctuation in the rate. For illiquid currencies like Russian Ruble and Thai Baht, there is 1.5% mark up on weekend.

Do you have any other tips to share? Let us know in the comments section below.