Last Updated on November 12, 2024 by Elizabeth

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Traveling in a foreign country? Your hotel will likely offer you the choice of being charged in local currency or U.S. dollars. This is one of those “buyer beware” moments, as one of these options is a big currency conversion rip-off. Here’s how to make the smart choice.

Why Dynamic Currency Conversion is Such a Rip-Off

So why do we call it a currency conversion rip-off? Dynamic Currency Conversion (DCC) masquerades as a convenient service that offers a choice: you can pay in the local currency or in your home currency. Choose to pay in U.S. dollars, and the hotel converts the amount on your behalf. But you should know that this process entirely unnecessary and expensive, since your credit card will automatically process the transaction in either currency anyway. Opting for the “convenience” means you’ll get a worse conversion rate and you’ll pay a service fee to boot.

While a hotel can only provide an estimate in your home currency, the rate is always guaranteed only in the local currency. That’s because foreign exchange rates will change slightly between the time of reservation and the time of payment. Since the hotel confirms a reservation in local currency, the customer should always pay in local currency. Whenever possible, don’t let the hotel process a conversion from a local currency to your home currency, as it effectively guarantees an unfavorable exchange rate along with a fee for the so-called convenience.

Choose Your Credit Card Wisely When Traveling Internationally

Travel abroad often? Sign up for a credit card with no foreign transaction fees, so you don’t have to worry about paying a hotel (or shop, or restaurant or rental car company) to bill you in anything other than the local currency.

Opt Out of Dynamic Currency Conversion In the Rewards Program

If you’re a member of the hotel loyalty program—and everyone should be— you may have been asked about dynamic currency conversion during the enrollment process.

Some hotel rewards programs enroll users in DCC by default, but a few make dynamic currency conversion an option at the time you are adding or modifying a credit card. If given this option, you should opt out of DCC. This seemingly small tactic can lead to big savings.

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