‘Scare tactic’ Martin Lewis exposes how cash machines abroad ‘make money’ from tourists

Martin Lewis: Presenter travels Malaga to test cash machines

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Despite the cost of living crisis, many Britons are planning a summer holiday abroad this year. One of Martin’s studio guests asked him whether they should pay in pounds or local currency at cash machines and in shops overseas.

When Britons make a purchase or use a cash machine in Europe, they will often be asked whether they want to pay in GBP or the local currency.

Martin travelled to Malaga in Spain to demonstrate how cash machines “make money” off holidaying tourists.

The money saving expert shared a few tips to help Britons “defeat” the cash machine charges.

First, Britons need to look out for a fee to use the cash machine. Martin said: “This (the fee) is coming from the cash machine.”

He said the only way to defeat a cash machine fee is to “find another cash machine”. Cash machine fees overseas can be as much as £4 but some will offer free withdrawal.

Britons then need to check how much the cash machine will charge them to withdraw money in GBP.

He said Britons should understand the cash conversion rate before doing it. 

Martin said: “Even the worst card only adds a three percent conversion. Here (at the cash machine) it’s got a four percent markup.”

“You want your card company at home to do the conversion.” 

Martin said Britons should always select the option to pay in local currency but cash machines will try to push them to pay in GBP.

He said the cash machine told him: “If you do not accept this option, we cannot guarantee the rate of conversion.”

Martin said it was a “scare tactic”. He added they want to “push you into thinking their way is the right way”.

The cash machine with the worst exchange rate would have charged Martin £20 more than using his own card’s exchange rate.

When it comes to buying products in shops abroad, Martin said “it’s exactly the same” and Britons should pay in the local currency, not GBP.

He said: “I’ve never seen a shop that’s cheaper than even a normal debit or credit card in the UK.

“Unless you’re going to start comparing, as a rule of thumb let your card do the conversion.”

Martin shared that a friend who worked in a shop in the UK told him that the shop used to push staff to get overseas customers to pay in their own currency.

He said this is because the shop would be able to get a commission from it which it couldn’t if customers pay in the local currency.

Martin emphasised that British tourists travelling to Europe for a summer holiday should always select the option to pay in local currency.

He added that Britons should never get their holiday cash at the airport as the rates are likely to be bad.

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