When you pay by credit card in Europe, you’ll be asked whether to make the transaction in euros or dollars.
Always choose euros. It’s that simple.
Here’s why: You’ll get a better currency transaction rate that’s determined by your bank and not the merchant or the service it uses for credit card transactions. Put simply, if you choose dollars, you’ll be charged more.
Speaking of being charged more, here’s an additional tip: When traveling in Europe or elsewhere outside of the United States, be sure to use a credit card that doesn’t charge foreign transaction fees. These fees apply to every transaction you make while abroad, and that’s true even if you choose “dollars” when asked. So in that case, you’ll be charged extra twice.
With regards to the euro/dollar question, it’s technically illegal for any merchant in Europe to just ring up a transaction in dollars without asking. This has happened to us only a few times, always in taxis, and while we’ve never refused that transaction, one can do so. (Our assumption is that this kind of thing isn’t necessarily malicious and that taxi drivers understand that many Americans are nervous about paying with foreign currencies, and are thus trying to help, not hurt. But it’s still wrong.)
Finally, if you look at the image at the top, you’ll see that we paid 33.15 euros, and would have paid $39.07 if we had chosen dollars. Our actual charge was $37.81, a savings of $1.26. That may not sound like much, but remember that this will add up over the course of a trip. And that the dollar conversion is up to the merchant, so it can vary by transaction and could be much worse.