I use a Canadian Mastercard to pay at restaurants, etc. while on vacation.

As a example, I recently made a transaction in Dubai, where after inserting my card and entering my PIN, I was asked about whether I wanted to proceed with the transaction in CAD (Canadian Dollars) or AED (Dirhams).

Should I pick the local currency or the currency of the country where the credit card is issued? Is there a substantial difference in picking one over the other?


The general rule of thumb is that you should always pay in local currency, as your credit card company will give you a better exchange rate than the retailer will.


It translates into who converts the Money. Normally the merchant is interested in local currency; in this example AED. The card company [Master in this case] converts the AED into CAD and your Bank [who issued your the credit Card] also make a margin. This means that you do not know the true value of your transaction [in CAD] till you see the statement.

These days quite a few large retailers offer the option of doing the conversion, i.e. rather than charging AED, the will charge you in CAD. The advantage is you know your CAD amount. The retailer would keep the CAD and manage as per his needs. i.e. he would take care of the conversion.

So what we are trying to compare is, whether the retailer would charge you more in conversion fee / rate or the Bank.

This is a difficult question to answer. It varies case to case basis. On small purchases the difference is not material.

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