• It is better to exchange in local currency while using ATMs abroad.
• With foreign exchange fees, tourers usually pay more than necessary.
• A feature is now available on the TransferWise app that informs holidaymakers when tricked.
During the half term, there is a common currency trap that many families often fall for when they visit abroad. With this trap, many British tourers often part with hundreds of dollars daily.
Tourists have to contend with some ambiguous options on the screen of the ATMs in a foreign country whenever they try to make a withdrawal. These options are often so confusing that tourists eventually pay higher than they should in foreign exchange fees.
For many years, The Mail on Sunday has warned about this legitimate scam; however, no significant effort has been made to stop it.
After inserting the card into the ATM, tourists have to deal with troubling options: They have to choose between making an exchange in their foreign currency or local currency.
According to TransferWise (an online currency transfer service), the issue is really significant as it affects over 1000 clients who operate with debit cards daily. And consequently, the platform has created a feature on its app that notifies clients once they become a victim of the “legitimate scam.”
While the notification will only emerge after the action, hopefully, the card user will learn from the mistake and make a better choice in the future. Such baffling options are also available in some hotels and shops. In such cases, the best choice is to settle for the local currency. In this way, you will avoid paying double exchange charges. However, be informed that some “words” which foreign banks usually apply can make things difficult. For instance, In Spain, there are often two options on the screen: “No for Euros” or “Yes, for British Pounds.” Considering that “no” comes off as something negative and being more accustomed to your home currency, you will naturally choose “yes.”
However, selecting “yes” is not the right choice as customers usually end up paying 6 percent – even close to 12 percent – higher in conversion charges, based on research conducted by TransferWise. According to UK Finance, several British tourists abroad lose over £1million per day as a result of the supposed “dynamic currency conversion.”
Furthermore, you need to be conscious of many baffling phrases. For instance, if you are asked to choose between “continue without conversion” and “continue with conversion,” endeavour to choose the former. Also, pick “local currency” if you have to choose between “debit in your home currency” or “debit in the local currency.” Another confusing phrase is, “Let us convert the money for you (Yes or No),” simply choose “no.”
A new feature, which is developed by Kristo Kaarmann (the Chief Executive of TransferWise), notifies users with “Remember to pay in the local currency,” as well as the calculated amount that you would have saved by making the right decision. According to Kristo, since such notification doesn’t break any law or regulation, it is developed to prevent clients from getting cheated.