Travelers Lose Millions by Choosing Dollars Over Local Currency on Foreign Card Payments

Israeli travelers frequently fall into a costly financial trap when paying by credit card abroad, often unknowingly incurring unnecessary fees. When presented with a payment terminal abroad, such as in Prague, Budapest, or Bangkok, customers are typically offered a choice to pay either in the local currency or in a more familiar currency like the US dollar or euro. Most instinctively select the dollar or euro option, believing it helps them understand the exact amount charged. However, this choice activates a mechanism called Dynamic Currency Conversion (DCC), where the merchant converts the payment into the foreign currency at inflated exchange rates and hidden fees before the transaction reaches the credit card company.

This practice bypasses the benefits of credit cards that offer zero foreign currency conversion fees, as the conversion happens at the point of sale rather than through the card issuer. The digital bank ONE ZERO identified a worrying pattern among Israeli travelers to countries like Poland, the Czech Republic, Hungary, and Thailand, where thousands of customers unknowingly forfeited their zero foreign currency fee benefits. Internal data revealed that these customers’ decisions to pay in dollars or euros instead of the local currency led to losses amounting to millions of shekels over just six months.

Dor Traser, Marketing Automation Team Leader at ONE ZERO, explained that many customers chose to pay in non-local currencies, effectively losing the advantage of zero foreign currency fees and accepting less favorable exchange rates from the payment providers. The bank advises travelers to always select the local currency when paying abroad, regardless of familiarity, to avoid these hidden charges. For example, payments in Poland should be made in zloty, in the Czech Republic in koruna, in Thailand in baht, and in the UK in pounds. The article emphasizes that the seemingly convenient option to pay in dollars or euros is a costly illusion that can be avoided by following this simple rule.