When you insert your card into a foreign ATM and enter your PIN you’re presented with two choices: withdraw cash in the local currency or have the ATM do a conversion for you. It’s confusing wording but there is a choice that’s always right.

Here’s why you should always choose to withdraw your money in the local currency.

Dynamic Currency Conversion (DCC)

DCC is a process where the ATM machine provider comes up with a conversion rate between your home currency and the local currency. ATM providers do this to profit by giving you a bad exchange rate. By doing so ATM providers can charge you 2% or more than they would be able to otherwise. It’s a completely unnecessary charge they trick you into paying with confusing wording.

atm currency conversion

For them it’s 2% or more on the transaction and those small charges can really add up – unfortunately for you and profit for them.

The Choice To Make

When you are using a foreign ATM always choose the option to be charged in the local currency. Do not accept the ATM’s conversion or rate and if you see those words go with the other choice. Whether you choose to accept the conversion rate or be charged in the local currency – you will get the local currency as cash in both cases.

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The machine isn’t asking what currency you want – there are ATMs that may do that – but when it comes to the just taking money out of a foreign ATM, it’s asking if you want the transaction to be charged in the local currency.

To better explain this, let’s say you want to take out 20 Euro, which is about 22 US dollars. If you choose to have the ATM do the conversion for you they might charge your bank $25 dollars to get that 20 Euro. So you’ll have 20 Euro in your hands at the end – this is what the machine will spit out – but when you check your bank statement you’ll notice the money withdrawn will be 24, 25 or more dollars. The ATM provider made a currency conversion it didn’t need to and overcharged you for it.

When you use the alternative option to be charged in the local currency then your bank does the conversion which is going to be the best rate possible – without any additional charge or mark up.

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Quick Tip

You always want to be charged in the local currency. In Germany that’s Euros and in America it’s dollars and in Bulgaria that’s leva, you get the idea – whatever it happens to be, choose to be charged in the local currency. You don’t want the ATM to do any currency conversion for you. Words like rate and conversion or percentage signs on the screen should be your red flags so be charged in the local currency and save on fees.