You’re standing at a bustling bistro in Paris or a leather shop in Florence. The waiter hands you the card machine. It’s a split-second decision that pops up on the glowing screen: Should I pay in euros or dollars? It looks like a courtesy. The machine even shows you the exact conversion rate. You see the familiar "$" symbol and think, "Hey, I know exactly what that costs in real money."
Stop. Don’t touch that button.
Choosing dollars—your home currency—is almost always a trap. It’s a legalized markup called Dynamic Currency Conversion (DCC), and it is designed to siphon extra cash from your bank account directly into the pockets of the merchant and the bank providing the software. If you want to keep your travel budget intact, you need to understand why the "convenience" of seeing your own currency is actually one of the most expensive ways to shop abroad.
The Secret Tax Known as Dynamic Currency Conversion
Most people assume the exchange rate is a fixed, universal number set by some giant clock in the sky. In reality, there are different layers to how money moves. When you choose to pay in dollars while in Europe, you are opting out of your bank’s professional exchange rate and opting into a rate set by the merchant's local bank.
They aren't doing this to be nice. They are doing it to make a profit.
Typically, when you pay in the local currency (Euros), your home bank or credit card issuer (like Chase, Amex, or Capital One) handles the conversion. These institutions usually use the "interbank rate" or the "mid-market rate," which is the closest thing to the "true" value of the currency. Even if your card has a 3% foreign transaction fee, it’s usually still cheaper than the alternative.
DCC is different. The merchant’s bank sets an arbitrary rate that is often 5% to 10% worse than the mid-market rate. I've seen receipts where the "convenience fee" for paying in dollars added an extra $15 to a $150 dinner. That’s a massive tip you didn’t mean to leave.
Why your brain wants to choose dollars
We’re wired to avoid ambiguity. Seeing "€42.50" requires mental math. Seeing "$48.12" feels safe. Merchants know this. Psychologically, we feel more in control when we recognize the currency. However, that feeling of control is an illusion. You’re essentially paying for a calculator service that charges a 7% commission.
Think of it this way: if a stranger on the street offered to tell you what time it was for five dollars, you’d walk away. That’s exactly what a credit card machine is doing when it asks if you want to pay in USD.
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When the ATM Joins the Scams
It isn't just retail shops. ATMs are notorious for this. You’ll put your card in a machine in Berlin, and it will scream at you with bright red text: "WARNING: DO YOU WANT TO ACCEPT OUR CONVERSION RATE OR DECLINE?" The wording is intentionally scary. It makes it sound like if you decline their conversion, you might not get your money or your bank will charge you a massive mystery fee. It’s a bluff. Always decline the conversion. When you decline, the ATM simply processes the request in Euros, and your bank at home does the math.
Rick Steves, the legendary travel expert, has been beating this drum for decades. He often points out that "independent" ATMs—the ones found in convenience stores or tourist traps rather than attached to a major bank like BNP Paribas or Santander—are the worst offenders. These machines often have high withdrawal fees plus the terrible DCC rate.
If a machine asks "With Conversion" or "Without Conversion," always choose Without Conversion.
The Myth of the "No Foreign Transaction Fee" Card
You might have a fancy travel card. Maybe it’s a Venture X or a Sapphire Reserve. You know you have "No Foreign Transaction Fees." You feel invincible.
But here’s the kicker: even the best credit card cannot protect you if you choose to pay in dollars.
When you select USD on that keypad, the conversion happens before the transaction reaches your bank. To your credit card company, it looks like a standard domestic purchase in U.S. dollars. They won't charge you a fee, but you’ve already been "taxed" by the merchant’s bank. You’ve essentially bypassed the very protection your travel card was supposed to provide.
To actually get the $0 fee benefit of your card, the transaction must be processed in the local currency.
Real World Math: Euros vs. Dollars
Let's look at how this plays out on a typical trip. Imagine you’re buying a high-end leather jacket in Spain for €500.
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- Scenario A (Paying in Euros): Your bank uses the mid-market rate (let's say 1.08). The cost is $540. If your card has a 3% fee, you pay $556.20. If you have a travel card with no fees, you pay $540 flat.
- Scenario B (Paying in Dollars via DCC): The merchant’s machine offers you a rate of 1.16 (the "convenient" rate). You hit "USD." You are charged $580 immediately.
In this very common scenario, you just handed over $40 for absolutely nothing. Over the course of a two-week European vacation, these small choices can easily add up to $300 or $500 in wasted money. That’s a couple of extra nights in a hotel or a very nice Michelin-starred meal.
What if the Merchant Insists?
Occasionally, you might run into a situation where a vendor says, "Our machine only does dollars for American cards."
This is almost always untrue. It’s either a lack of training or a deliberate attempt to get a kickback. Most DCC-enabled terminals provide a small commission to the merchant for every customer who chooses the home currency.
If you see the screen showing dollars, politely ask them to "Charge in Euros, please." If they’ve already swiped it and it’s asking you to choose on the screen, just hit the button for Euros yourself. You are the one paying; you have the right to choose the currency.
The rare exception
Is there ever a time when you should pay in dollars?
Technically, yes, but it’s rare. If you know for a fact that your bank charges a massive, flat "foreign transaction fee" (some smaller credit unions or basic checking accounts charge $5 or $10 per international swipe regardless of the amount), and you are making a very small purchase, the DCC might—maybe—be cheaper.
But honestly? If your bank is that predatory, you should get a new card before you leave the tarmac. For 99% of travelers, paying in Euros is the mathematically superior choice.
Tipping and Tech: The New Frontier
The "Euros or Dollars" debate is moving into the digital space too. Apps like Uber or Bolt usually handle this behind the scenes based on your account settings, but platforms like PayPal are notorious for aggressive DCC.
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If you’re booking a local tour in Greece via a platform that uses PayPal, PayPal will try to "help" you by converting the price to dollars. Again, their rates are historically poor. Always look for the tiny link that says "View Currency Options" and ensure you are paying in the currency of the seller.
Also, keep an eye on tap-to-pay. With Apple Pay and Google Pay, the prompt for currency conversion still appears on the terminal screen. Don't just tap and walk away; wait for the prompt to ensure you select the local currency.
Practical Steps for Your Next Transaction
Navigating international finance shouldn't feel like a math exam, but a little vigilance goes a long way. Here is exactly how to handle your money when you're on the ground:
- Audit your wallet before you fly. Check every card you own for "Foreign Transaction Fees." If they have one, leave them at the bottom of your bag for emergencies only.
- Carry a small amount of "emergency" cash. Don't buy Euros at your local US bank branch or at an airport "Travelex" kiosk. Both offer terrible rates. Use a bank-owned ATM once you land in Europe.
- The Golden Rule of the Keypad: Whenever a screen presents two flags or two currency symbols, always aim for the local one.
- Read the receipt. If you see a line item that says "Exchange Rate" or "Mark-up," you’ve been DCC’d. You can technically ask the merchant to void the transaction and redo it in the local currency, though this can be a headache if there’s a language barrier.
The reality of travel in 2026 is that the "hidden fees" aren't just in the airline tickets or resort charges; they are at the point of sale. Banks have become incredibly sophisticated at finding ways to shave a few percentage points off your net worth while you’re distracted by the beauty of the Colosseum.
Choosing to pay in Euros isn't just about saving a few bucks. It’s about not being a "mark." It’s about ensuring that your hard-earned money goes toward your experiences, not toward a bank's quarterly profit margin.
Next time that screen pops up, remember: the dollar symbol is a red flag. Choose the Euro, keep your margin, and enjoy the trip.
Final Checklist for Your Trip
- Download a Currency Converter App: Use something like XE or Currency Plus so you can check the real mid-market rate in real-time. This gives you leverage to see exactly how much a merchant is trying to overcharge you.
- Set Travel Notices: Even though many modern banks don't require them, it's worth checking if your bank needs to know you're abroad. There is nothing worse than having your "No Fee" card declined because you're in a "high-risk" area like a souvenir shop in Rome.
- Always Choose "Euros" at ATMs: This is the most common place people lose money. ATMs are aggressive. They will use words like "Guaranteed Rate." Ignore them. The "Non-Guaranteed" rate from your home bank is almost certainly better.
- Check for "Global ATM Alliances": If you use Bank of America, for example, you can use Barclays in the UK or BNP Paribas in France to avoid certain ATM fees. Research your bank's partnerships before you go.
By staying aware of these small technicalities, you ensure that "Should I pay in euros or dollars" is a question you can answer with total confidence every single time.
Actionable Insight: Before your next trip, call your primary credit card company and ask specifically for their "Foreign Transaction Fee" percentage. If it's anything above 0%, apply for a travel-specific card today to avoid the 3% "tax" on every single purchase you make abroad. When you arrive, always select the local currency on every card terminal and ATM to ensure your bank—not the merchant—handles the conversion.