Selecting the local currency (EUR, AUD, etc.) is almost always cheaper. The markup from Point-of-Sale (PoS) systems is typically much higher when you choose USD or another non-local currency.
We always recommend selecting the local currency where you’re spending. The fees added by PoS systems are almost always more expensive than letting your issuing bank handle the conversion.
Our issuing bank charges about a 2% FX fee, which fluctuates slightly based on factors such as currency pair, time of day, day of week, and market liquidity. This rate is based on what’s called the Interbank Rate — the wholesale exchange rate banks use with each other.
However, PoS systems nearly always charge far more than this to perform their own exchange. Think of it this way: when your card lets the issuing bank do the conversion, it’s “closer” to the FX markets, with fewer intermediaries and fewer layers of added markup.
PoS systems use something called Dynamic Currency Conversion (DCC) — and it’s almost always worse for you. Markups of 3%–7% above the interbank rate are common, meaning you could end up paying 5%–9% more than the true market rate.