Should I accept or decline conversion ATM?

Should You Let a Foreign ATM Convert Your Currency? A Resounding No.

You’re at a foreign ATM, card inserted, and ready to withdraw cash. Suddenly, a seemingly helpful prompt appears: “Would you like to convert to your home currency?” It might sound convenient, even offering a preview of the final amount. Resist the temptation. Declining this conversion, even if the machine insists, is almost always the smarter financial move.

While the ATM’s conversion might seem upfront and transparent, it often hides inflated exchange rates and hidden fees. These Dynamic Currency Conversion (DCC) offers are presented by the ATM operator, not your bank, and they profit from the markup they add to the exchange rate. Think of it as paying a premium for the “convenience” of seeing the final amount in your home currency.

Your own bank, on the other hand, typically uses the wholesale interbank exchange rate, which is much closer to the true market value of your currency. Even if your bank charges a foreign transaction fee (typically 1-3%), you’ll almost certainly get a better overall rate by letting them handle the conversion.

Here’s why declining the ATM’s conversion is the better choice:

• Better Exchange Rates: Banks generally offer more competitive exchange rates than foreign ATMs employing DCC. The markup on ATM conversions can be significant, sometimes as high as 10%.
• Transparency: While your bank’s foreign transaction fees are usually clearly stated, the ATM’s conversion markup is often obscured within the offered exchange rate. This lack of transparency makes it difficult to compare the true cost.
• Predictability: By declining the conversion and letting your bank handle it, you have a better idea of the fees involved. You can check your bank’s foreign transaction fee policy before your trip, allowing you to budget accurately.

So, the next time a foreign ATM offers to convert your currency, remember the golden rule: Decline, Decline, Decline. It might seem like an extra step, but the savings you’ll accumulate over multiple transactions will make it well worth the effort. A little vigilance can go a long way in protecting your travel budget.