Paying abroad: cards, cash and the conversion trap
The card terminal in a Prague restaurant asks you a polite question in English. Would you prefer to be charged in euros rather than koruna?
It reads as a courtesy. It is a product, and it is sold at a margin you will never see itemised on your statement.
Say no. Pay in koruna. Do that every time, in every country, at every terminal and every cash machine, for the rest of your travelling life.
What the offer actually does
The mechanism has a name — dynamic currency conversion, or DCC — and it is worth understanding precisely, because the pitch depends on you not understanding it.
Accept, and the merchant’s payment provider converts the transaction, not your bank. It sets its own exchange rate, adds a margin over the wholesale interbank rate, and keeps that margin. Payment-industry sources put the typical DCC markup at roughly 3–7% above interbank as of mid-2026, with worse implementations documented well above that.
Decline, and the transaction is authorised in the local currency. Your own card scheme converts it at a published rate that sits close to interbank, and your issuer adds whatever foreign-transaction fee it charges. That combination is almost always cheaper. Not usually. Almost always.
The margin is shared between the payment provider, the terminal’s acquirer and often the merchant. That is why the offer exists.
The wording is the trick
DCC is never presented as a fee. It is presented as clarity.
Watch for “pay in your home currency”, “with conversion”, “guaranteed rate”, “known amount today”, or simply your own currency shown first and larger. All of these mean the same thing: someone other than your bank is doing the maths, in their favour.
On many terminals the local-currency option is the smaller button, the grey one, or the one below the fold on the screen. On some it is labelled “without conversion”, which sounds like the worse choice and is the better one.
Cash machines do exactly the same thing, and are worse about it, because the screen is larger and the design freedom greater. A machine that offers you “a guaranteed rate of 23.4 CZK to the euro” is offering you DCC. Decline, take the local-currency amount, and ignore the warning screen that tells you the rate cannot be guaranteed. That warning is the product defending itself.
If the terminal converts before you can object, ask for the transaction to be voided and redone. Merchants can do this. Some will sigh.
Three fees, not one
People conflate these constantly, then draw the wrong conclusion about which card to carry.
The card scheme’s conversion. Visa and Mastercard each publish a daily rate that sits close to interbank. This is the cheap layer, and you get it by declining DCC.
Your issuer’s foreign-transaction fee. A percentage your own bank adds for spending outside its home currency. Many EU-issued cards charge nothing inside the euro area and something outside it. This is the layer you control by choosing which card to bring — check your own bank’s current fee page, because these change.
The ATM operator’s fee. A flat charge levied by whoever owns the machine, disclosed on screen before you confirm. Independent operators charge it; bank-owned machines in most of Europe usually do not.
DCC is a fourth, optional layer stacked on top of all three. It is the only one that is entirely avoidable, and it is the largest.
Which machine to use
Use a cash machine attached to an actual bank, ideally in the bank’s lobby or its exterior wall.
Avoid the free-standing machines in tourist streets, shop doorways, hotel lobbies and airport arrivals halls. These are operated by independent networks whose business model is precisely the combination described above: a flat withdrawal fee, plus a DCC pitch with the expensive option pre-selected.
Where a flat fee applies, withdraw fewer, larger amounts. Where it does not, it makes no difference.
And decline the machine’s conversion offer even when you are declining a fee you can see. The visible fee and the invisible one are separate charges.
Where cash still runs Europe
The continent is not converging on one answer, and assuming it is will strand you.
The Nordics and the Netherlands are effectively cashless. Danish and Swedish cafés, Dutch market stalls and Norwegian buses may not take notes at all, and some will look at you oddly for offering.
Germany, Austria, Italy and Greece are the other pole. Card acceptance is widespread in cities, but cash-only bakeries, tavernas, market traders, taxi drivers and small guesthouses remain entirely normal, not exceptional. In rural Greece and southern Italy, assume cash until shown otherwise.
“Card accepted” does not mean your card
This is the failure that catches people who have done everything else right.
In Germany, “EC-Karte” or girocard is the domestic debit scheme, and it runs on rails that have nothing to do with your Visa or Mastercard credit card. A restaurant with a terminal on the counter can genuinely be unable to take your card. In the Netherlands, plenty of terminals take domestic debit and decline credit cards outright, and Maestro — long the workhorse for cross-border acceptance in both countries — has been wound down on newly issued cards, which has made compatibility less predictable rather than more.
American Express is refused far more widely than its holders expect, everywhere south and east of Belgium.
The practical answer is dull and effective. Carry two cards on different schemes, keep them in different places, and keep enough cash to settle a dinner.
Multi-currency and neobank cards, by mechanism
Do not choose one by brand. Choose by the four mechanics that actually determine what you pay, and verify the current numbers on the provider’s own fee page in the week you travel, because they are revised often.
Weekend and out-of-hours markups. FX markets close. Most near-interbank cards add a percentage from Friday evening to Monday morning to cover the gap. If you are converting a large sum in-app, do it on a weekday.
A monthly free-withdrawal allowance. Typically an amount or a number of withdrawals per month, then a percentage or flat fee beyond it. Plan the month, not the trip.
Held balances versus point-of-sale conversion. Cards that hold multiple currencies let you convert deliberately, at a moment you choose. That is strictly better than converting by accident at a till.
Fair-use and monthly caps. Near-interbank rates often apply only up to a monthly spend threshold. A group holiday where one person fronts the villa can blow through it.
The hold that eats your headroom
A deposit hold is not a charge, which is why it surprises people.
Hire car desks, hotels, some ferry operators and many fuel pumps place a pre-authorisation on your card. The money is not taken; it is ring-fenced, so it reduces your available credit without appearing on your statement. Irish hire car holds in particular run €1,500 to €5,000 as of mid-2026, and hotels commonly hold a night or the full stay plus a margin for incidentals.
Holds release in days, sometimes weeks, occasionally after the statement closes. On a debit card the money leaves your balance in the meantime, which is the version that ruins a week.
Travel with a credit card that has real headroom for the deposits, and a debit card for cash. Ask the desk what the hold will be before you sign, not after.
Tipping, honestly
Over-tipping in Europe is a quiet, expensive habit imported from elsewhere. Service is generally included and staff are generally on a wage, so a tip is a top-up rather than a subsidy.
The rough conventions: in France service is included by law and rounding up or leaving a couple of euros is normal. In Italy the coperto on your bill is a cover charge, not a tip, and tipping beyond rounding is uncommon. Spain, Portugal and Greece: round up, or leave a small amount after a proper sit-down meal.
Germany and Austria: you state the total including the tip as you hand over the card, usually rounding up by something in the region of 5–10%. The Nordics: genuinely optional and low, though terminals increasingly prompt. The Netherlands and Belgium: round up. The UK and Ireland: 10–12.5% in restaurants, very often already added as a service charge — read the bill before adding a second one.
Nowhere in Europe is 20% expected. Over a fortnight, the difference is a hotel night.
The exception: euro-adjacent countries
The advice above assumes you can tell which currency you are in. Sometimes you cannot.
Several places sit alongside the euro without being in it. Bosnia and Herzegovina’s convertible mark is pegged to the euro; Denmark’s krone is held in a tight band; Kosovo and Montenegro use the euro without being euro-area members. Bulgaria stopped being an example of this on 1 January 2026, when it adopted the euro at the fixed rate of 1.95583 lev.
In Czechia, Hungary, Poland and much of the Western Balkans you will find prices quoted in euro in tourist-facing places — and change given in koruna, forint, zloty or dinar at a rate the business chose. That is DCC by another name, done in cash.
So carry a modest amount of local currency in those countries whatever your card strategy is, and pay in it. Not a fat envelope; enough for two meals, a taxi and a market. It costs you almost nothing to hold and it removes the only situation where you have no good option.