At a hotel desk in Prague, a restaurant in Budapest or a cash machine in Istanbul, the card terminal often asks the same question: pay in your home currency or in the local one? Your answer decides who sets the exchange rate, and so how much ends up on your statement. This guide explains what paying in a foreign currency costs, what EU law requires the terminal to show you, and why the local currency is usually the better choice.
Two ways to convert
If you pay in the local currency, say koruna, forint, lira or pounds, your bank or card provider converts the amount. The rate and any foreign transaction fee are set out in your card terms, so you know them in advance or can look them up.
If you choose your home currency at the terminal, the company running the terminal or cash machine converts on the spot. This is called dynamic currency conversion. The merchant or its payment provider then picks the rate, not your bank. You see a familiar amount straight away, but the rate includes a mark-up that the provider sets itself.
What EU law requires
The rules are in Regulation (EU) 2021/1230 on cross-border payments. For cards issued in the EU it says:
- Anyone offering conversion at a cash machine or point of sale must first show the total conversion charges as a percentage mark-up over the latest European Central Bank reference rate.
- Your bank must state its own conversion charges in the same way, as a percentage over the ECB rate, so that you can compare.
- After a card payment, your bank must send you the details electronically without undue delay.
The EU's Your Europe portal adds that payments in euros within the EU may not cost more than the same payment at home. For other EU currencies your card provider may charge a conversion fee but has to tell you before you pay. Corporate cards billed to an employer are not covered. If your card was issued in the UK, the US or Canada these EU duties do not bind your bank, but the basic choice at the till works the same way.
The reference rate as a yardstick
The European Central Bank publishes reference rates for 29 currencies every working day. They are the benchmark against which any mark-up can be measured. Some values from 9 October 2026:
| Currency | 1 euro buys |
|---|---|
| Czech koruna | 24.369 CZK |
| Hungarian forint | 365.08 HUF |
| Polish zloty | 4.3835 PLN |
| Turkish lira | 55.1033 TRY |
| British pound | 0.84763 GBP |
| Swiss franc | 0.9313 CHF |
| US dollar | 1.1206 USD |
Compare the rate on the terminal with these figures and you can see at once how large the mark-up is.
Worked example: a hotel bill in Prague
Three nights in Prague end with a bill of 6,000 koruna. At the ECB rate of 9 October 2026 that is 6,000 divided by 24.369, or EUR 246.21. The mark-ups below are assumptions chosen to show the maths. The real figures are in your card terms and on the terminal screen.
- Pay in koruna, your bank adds an assumed 1.5%: EUR 246.21 times 1.015 equals EUR 249.91.
- Pay in euros at the terminal with an assumed 5% mark-up: EUR 246.21 times 1.05 equals EUR 258.53.
- Difference: EUR 8.62 on a single payment.
If your card has no foreign transaction fee, the gap is wider still. Over a whole trip with hotel, restaurants and car hire it soon adds up to the price of an extra meal or a taxi ride. The same logic applies to a UK card offered pounds instead of koruna.
Reading the terminal screen
When a terminal offers conversion you usually see two amounts side by side: the price in local currency and a converted figure, with an exchange rate and the mark-up as a percentage. Do not be swayed by the familiar currency. The number that matters is the mark-up. If it shows several percent, paying in the local currency is almost always cheaper, as long as your bank charges less. For larger amounts, take a photo of the receipt so you can check later what was actually taken from your account.
Cash machines
The same principle applies at a cash machine. If the machine offers to charge you in your home currency, pick the local one. In the EU the operator has to show the mark-up first, and you can compare it with the reference rate just as you would at a till. If you cancel because the mark-up looks too high, no conversion takes place and nothing is charged for it. What your own bank charges for withdrawals abroad is listed in its fee schedule.
Hotels and car hire booked in advance
With online bookings the question comes up earlier. Some sites show a price in your currency while the hotel charges you in the local one on departure. Your bank then converts at the rate on the day you pay, so the amount can differ from what you saw. If you prepay and choose to be charged in your own currency, the booking site sets the rate. Here too it is worth checking against the reference rate. How vouchers and cashback lower the final price of a booking further is explained in our guide voucher or cashback.
Step by step
- Before you travel, check in your card terms or banking app what your bank charges for payments in a foreign currency.
- At tills and cash machines, always choose the local currency when the terminal asks.
- If staff ask whether you would like to pay in your home currency, politely say no.
- If unsure, compare the rate shown with the ECB reference rate.
- After the trip, check your bank's payment notifications and query anything that looks wrong.