This question will pop up every time you go to pay for something with your credit card or debit card while abroad. Whether it's a clothing store, a bar or a hotel restaurant, you've always got the choice between paying in the country's local currency or your home country's currency. The latter starts a process called Dynamic Currency Conversion, leaving your funds with a third-party institution to process the card payment with the merchant. The third-party institution is different to your card issuer, who would be the ones handling the normal exchange rate if you opt to pay in local currency.That institution, unbeknownst to you, is able to set the exchange rate at whatever it likes. And it's often as exorbitant as possible because it's completely legal. This can mean, on top of your purchase, you'll be charged a rate that can typically reach up to 8%, just for choosing to pay in your local currency. Let's say you've just gone to pay for a $500 dinner with your credit card and you opt to pay in your own currency as opposed to in the local currency. You could be charged something like $40 just for pressing that button on the machine. If you didn't, you wouldn't. Now consider how quickly that can add up if you're not aware of such a costly mistake and you can see why it's worth shouting from the rooftops - always pay in the local currency.