Everyone asks: What is the best currency to pay in overseas, local or Aussie dollars?

When I make an electronic transaction overseas, sometimes I am offered a choice - pay in local currency or in Aussie dollars. What's the best option?

Always select the local currency payment.

While it might sound like a great idea to see exactly what you're up for in Aussie dollars, what you don't know is what currency conversion rate is being applied to the transaction, and the dice are loaded against you.

When you select payment in Aussie dollars, you're electing to pay at the Dynamic Currency Conversion Rate, and it will almost certainly end up costing you more than if you select to make the payment in local currency.

This is because the DCC rate is skewed in the merchant's favour, by as much as 4 per cent.

This will be on top of whatever foreign transaction fee your card provider might impose.

Some merchants will try and shunt you towards an Aussie dollar payment.

Decline politely - you'll dodge the DCC bullet.