When traveling in Portugal, or anywhere in the Eurozone, using your debit or credit card should be straightforward. However, you might encounter a confusing question at ATMs or point-of-sale terminals: whether to process your transaction in euros or US dollars. The golden rule to remember, especially in Portugal, is to always choose euros. Opting for US dollars, while seemingly convenient, can lead to unnecessary costs due to a sneaky practice known as Dynamic Currency Conversion (DCC).
Dynamic Currency Conversion allows the merchant’s bank or ATM operator to convert the transaction amount from the local currency (euros in Portugal) to your home currency (US dollars) at their own exchange rate. This rate is almost always less favorable than the rate your own bank would apply. By choosing to pay in dollars, you’re essentially giving control of the exchange rate to a third party, and it’s highly unlikely to be in your financial interest. This can result in you paying a significantly higher amount than you would if you had simply chosen to transact in Portugal euros.
This DCC process is highly profitable for businesses, including hotels, restaurants, and shops. Therefore, staff may sometimes strongly encourage you to select the dollar option. Be assertive and always insist on paying in Portugal euros. When using a credit card, maintain control of the payment terminal yourself to ensure you are the one making the currency selection.
Beyond DCC, it’s also wise to be aware of foreign transaction fees that your credit card provider might impose. Some cards levy a flat fee per foreign transaction, plus a percentage of the transaction amount. Before traveling to Portugal, review the terms and conditions of your credit cards to identify those with the most favorable foreign usage policies. It might be beneficial to use a specific card while in Portugal to minimize these charges. Despite this, always carry at least two different credit cards as a backup in case one is lost, stolen, or compromised.
For more comprehensive advice on managing your money while traveling, resources like Rick Steves’ travel tips website (https://www.ricksteves.com/travel-tips/money) offer valuable insights. However, it’s crucial to emphasize the growing prevalence of DCC and the importance of vigilance. While the frequency of encountering DCC in Portugal is anecdotal, it’s a global issue that travelers should be prepared for to avoid unexpected and inflated costs. When in Portugal, euros are your friend – choose them wisely at every transaction.
