Last night I decided to use my UK Lloyds Visa debit card to pay for the weekly shop in Mercadona and I was offered the choice- be billed in £'s or €'s and then it gave the rates etc.

Anyone know which is best to do? I'm a bit rubbish when it comes to this sort of thing. Only thing I know about money is how to spend it

If you charge in Euros, it will be your bank that determines the exchange rate.

If you charge in Pounds, it will be the merchant that decides the exchange rate.

In all likelihood, your bank is going to be more up to date on the current rate. The merchant will probably use weeks or months-old exchange rates, and then take a few cents on top as well.

Does that mean you need to watch the exchange rate trend? ie if the pound is on the up against the euro then get billed in Euro - if it is going down get billed in GBP so that you get the most advantageous rate? Or is it the other way about? I think that is the OP's question.

No, not neccessarily. I was only pointing out who likely determines the exchange rate in that case. Merchants tend to be a even less generous than your bank.

I noticed the OP mentioned that it showed the rates at decision time.

Well, if one apple costs 10p and the other costs 50p, which one are you going to buy?

Once bitten . . . . I only ever use my debit card in a bank's cash machine during opening hours and choose 'Euros'. I don't normally carry it when I'm out.

I too only use a debit card in a cash machine (carefully I might add)
After having a sting on my debit card - which was refunded - Barclays Fraud Advisory dept suggest I use a credit card for purchases.

Evidently a debit card gives instant access to your bank details and the money can be taken out from you account immediately whereas a credit card does not.

When shops offer you the opportunity to pay in £ on your UK card they use something that they call a "Dynamic exchange rate". It means that they will charge you more because they want to make a profit on the exchange rate. You should pay in €.

Dave

Rammy yes absolutely.
I would NEVER (except in emergency) use a non national card for a national debt i.e. UK card in Spain or France. French or Spanish card in the UK.
They can almost charge whatever exchange rate they like.
Also do not expect the legal protection of an English credit card to cover a Euro transaction.

I used to totally agree with you on this one, but since UK banks have started charging a 'transaction fee' of a couple of pounds/percentage of the transaction for each use of the card, in my experience, there seems to be very little difference. We put this to the test on our trip to Spain in March 2012.

That's an interesting angle that I hadn't considered. Do the banks not charge a transaction fee then when the store converts the € into £?

I have a Halifax Clarity Credit card that doesn't charge a transaction fee and, as a rule, I get just slightly below the commercial exchange rate. So, at the moment I will get @ €1.24 to the £.

Dave

Yes, they do, but it still seems to work out about the same

We used to always pay cash, as we bank with Nationwide and cash withdrawals abroad used to be free, but the rules recently changed and any withdrawal now carries a transaction fee of £1 PLUS a 'Non-UK commission fee'. Costs about £6 in total to draw 300€. We have now got a Nationwide Select Credit card which allegedly doesn't carry a fee for transactions made abroad (will test that later this year), and have resolved to make sure we increase the regular currency transfer to our Spanish bank account before we next go out to Spain, so we can draw cash out from there (not free, but we have to have the account anyway to pay the mortgage/utility bills etc)

If you bank with Santander UK, they allow you to withdraw cash from Santander ATM's in Spain free of charge, and the exchange rate is the Visa bank rate.(you don't need a Spanish Santander account).
This is the cheapest way I have found to transfer cash to my Cam account.

Be careful about that. I bank with Santander here in Spain and have a Santander debit card. I was told that to draw money from a Santander ATM or any with the 4b sign there would be no charge.

I do not get charged when I draw cash from the ATM outside the bank and from a 4b card outside the Banesto bank in my village but the other 4b ATM outside the other bank in the village (I think its La Caixa) I do. I also get charged when I use the 4b ATM in Carrefour. Consequently I now give them a miss.

I also use the clarity card. I would add that they do charge you interest on cash withdrawals at c.1% per month. Still a good deal as you get the commercial rate.

I agree that 1% per month isn't bad at all but I have found that if I load the card with cash first or pay it off very quickly the interest is either nil or very low. This really is the best way I have found to get cash or pay for things at the best £ to € rate.

Dave