Paying Abroad: Choosing the Wrong Currency Can Cost You Extra Euros

Paying in euros while traveling outside the Eurozone can be a costly convenience, according to Julius Ivaška, Business Service Director at Urbo Bank.

Many travelers opt for euros simply because it's easier to understand the final amount. Dealing with foreign currency can seem confusing, and there's a fear of merchants entering incorrect amounts. However, this convenience often comes with a hidden cost.

When you choose to pay in euros on a terminal outside the Eurozone, the currency conversion is handled by the merchant's bank or payment provider, not your own. This service, known as Dynamic Currency Conversion (DCC), typically applies a markup that can significantly exceed your bank's standard foreign exchange fee. Urbo Bank, for example, charges a 2% fee for foreign currency transactions, which is transparent and listed in their price list.

In contrast, DCC markups can range from 8% to as high as 12%, according to industry guides and previous consumer organization calculations. This means a purchase of 100 euros in a non-euro country could cost you 102 euros if paid in local currency with your bank's conversion, but 108 to 112 euros if you choose to pay in euros through DCC. Ivaška warns that this seemingly small convenience can add up to significant overpayments on various travel expenses.