Should you pay in pounds or local currency online?

A hotel quotes €250 and the checkout offers to charge £214 instead. Is the sterling option expensive? With a fee-free card it could be. With another card the exact same sterling offer might be cheaper. You can make a decision in a minute if you know who is offering the conversion and what your particular card charges.

Find the currency that reaches your card

A website can display an approximate price in pounds while the small print says it will charge euros. That figure helps you browse. It does not lock in a rate. Go to the final payment page and find wording such as you will be charged or transaction currency. On a hotel booking, check for any separate amount payable at the property.

Sometimes the merchant offers to convert a transaction into your home currency. This is called dynamic currency conversion. Visa says the merchant should display the amounts in both currencies, the rate and any extra fee or mark-up, and let you choose. A retailer can also set a separate fixed UK price for a product. For that kind of offer, compare the checkout totals directly without assuming that it is a conversion of the foreign price.

Run the numbers for the card you will actually use

Suppose the euro charge is €250 and for illustration the card rate is £0.84 per euro. Multiplying gives a base cost of £210. Look up the tariff for your specific debit or credit card and add its foreign-currency purchase fee, plus any fixed charge.

The £214 option costs £4 more than the first card’s estimate, but £1.78 less than the second card’s estimate. Those figures assume no extra charge on the sterling transaction. A card tariff can distinguish a charge in another currency from a purchase with an overseas merchant. Read the relevant wording before relying on that assumption.

For a quicker check, divide £214 by €250. The merchant is effectively charging £0.856 per euro. If your card’s rate plus fees comes out below that figure, the card-converted euro payment is cheaper on those assumptions. Check which way round your rate is written. If a calculator displays euros per pound, divide the euro amount by the rate instead.

When today’s rate cannot settle the question

For a booking paid on arrival in three months, today’s exchange rate only gives a budget estimate. Is one offer paid now and the other later? Does one give free cancellation? Put those differences beside the totals. A £2 currency saving buys little if it changes a refundable reservation into a non-refundable one.

For a monthly subscription quoted in euros, a fixed euro charge can produce a different sterling amount each month. Write the overseas renewal currency beside the renewal date. For a refund, keep the receipt showing the original currency. If the refund is converted back to pounds later, the exchange rate may have changed.

Changing VPN server might alter the currency first displayed. It does not change your card’s fee schedule. If the aim is to compare two countries’ actual prices, recreate the same basket in both shops before choosing how to pay. For a holiday booking, our flight and hotel price guide explains which fare rules and extras to match.

Help with exchange rates

• Visa UK explanation of dynamic currency conversion
• Mastercard UK currency converter