Beware of this money trap when booking your next holiday

When you book travel online, do you allow the website to convert the price to New Zealand dollars?

Most websites will automatically do this based on your location –but this might be costing you more money. I’ll come back to this shortly, but let’s chat about what’s going on here.

Hopefully you should all be familiar with the term’dynamic currency conversion’. It’s a trap for travelers typically seen when paying for goods overseas via credit or debit card, where consumers are offered the chance to pay in the local currency, or your own home currency.

For example if you’re in London, you’ll be asked whether you want to pay in pounds or NZ dollars.

Hint: always choose to pay in the local currency to avoid hefty fees and markups.

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Tristan Dakin, the ANZ country manager at travel money card Wise, says dynamic currency conversion is one of the most common money traps for travelers.

“Basically what you’re being asked is do you want the server or merchant who’s processing it for you to do the exchange for you, or do you want to let your bank or whoever issued your card to make the exchange?” Says Dakin.

“If you’re allowing the bank or the ATM or the merchant to make the conversion for you, generally it’s a pre-approved exchange rate with a bunch of hidden markups. Those fees can add up to a lot if you’re making a lot of withdrawals or purchases over the course of a trip.

“And it can include a currency conversion fee which can be in the order of 5-6% above the mid-market rate that you generally see on Google, there’s an international transaction fee sometimes as well, and a bunch of other opaque fees that are compounded into that rate that they give you. ”

Dakin says this currency conversion trap can also happen when people are booking travel on third-party websites.

“The general rule of thumb, regardless of what card you’re using, is to always select the local currency, because if not, you’re leaving yourself open to all these hidden fees that the merchant or the vendor or that specific bank are going to charge for that conversion. ”

With that in mind, I decided to have a look for myself.

I pulled up a few websites such as and and chose a hotel in London for my experiment.

Always choose to pay in the local currency rather than your home currency.

Nick Pampoukidis / Unsplash

Always choose to pay in the local currency rather than your home currency.

One browser had my location as New Zealand, and therefore gave me prices in New Zealand dollars, the other browser was in Incognito mode so I could set it as the local currency. For, this was euros, and Expedia, USD.

Putting in exactly the same dates, the incognito browser returned a one-night stay at € 209 per night at the Paddington Park Hotel on

From my New Zealand browser, the same result would cost me NZ $ 372. But when I checked the currency conversion on Google for the latest rates, € 209 was converted to just $ 343 per night –a difference of about $ 30.

I tried the same thing on –which on the private browser, advertised a price of US $ 189 per night for the same hotel and dates, or NZ $ 345 on my other browser. But when I used Google for the latest currency conversion of USD to NZD, the price was lowered to NZ $ 289 –an even greater difference of nearly $ 60.

Watch out for hidden fees with withdrawing cash from an overseas ATM or currency conversion store.


Watch out for hidden fees with withdrawing cash from an overseas ATM or currency conversion store.

However, it’s worth checking what your issuing bank charges, and the rate at which they convert the final amount. My bank, BNZ, also charges a 2.25% of the NZ dollar value of an international withdrawal or purchase.

I knew about dynamic currency conversion when paying for goods while overseas, but I had no idea it also played a part in booking travel from my own home country.

Dakin says another common trap is withdrawing money overseas-and if you have to, don’t let the ATM do the currency conversion for you.

“The markups on those exchange rates and the fees they charge are outrageous. I would personally say avoid that at all costs.”

The same goes for withdrawing cash at airport travel money exchange operators, where the fees are even greater.

And if you go to other physical currency converter stores, watch out for those misleading advertising claims of’zero fees on all our conversions’ or ‘0% commission ”. Sure there might be zero fees on the conversion, but the fee will be built into the exchange rate, building on a massive margin of 5-6% higher than the mid-market range, says Dakin.

Travel money cards, or global currency cards, are one way around some of those fees –a card that allows you to pre-load money in different currencies and use it as a bank card, which means you can always pay in the local currency.

The final trap for new players?

Dakin says watch out for apps connected to your credit cards, such as ride-share services like Uber. If you’re planning on using them overseas, be aware of the exchange rate and international transaction fees you might face. Always check your local bank card’s rate before you travel.

All these things individually might only seem like a small additional amount on a payment, but they can add up to a hefty fee when making multiple transactions each day on an overseas holiday.

What other money traps have you fallen for while traveling or booking travel?

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