Using an ATM in a Foreign Country? How to Avoid Paying Too Much for the Local Currency

Photo Source: iStockphoto

I’m going to start today’s post with a scenario:

A couple from the U.S. travel to Mexico for vacation. They go to an ATM together and use their debit cards, both issued by the same U.S. bank, to withdraw $8,000 pesos. When they check their bank statement, they learn that one of them ended up paying more for the same amount of pesos.

So, how is this possible?

Simple. The one who paid more let the ATM operator handle the conversion from pesos to dollars, a practice known as dynamic currency conversion (DCC), while the other one declined the offer and let their bank do it.

Understanding Dynamic Currency Conversion (DCC)

When you use your debit or credit card in a foreign country, you may not immediately know the exchange rate that your card provider will give you until you check your statement.

With DCC, the ATM operator offers to handle the conversion for you and tells you up front what the exchange rate will be. That may sound good, but they aren’t doing this out of the kindness of their hearts. This convenience comes with a cost, normally with a percentage mark up, and rarely works out to the benefit of the customer.

How to Avoid It

You have the right to decline the DCC offer and process the transaction normally, but many people don’t know that and just hit accept.

Below is a picture of a DCC offer at an ATM operated by HSBC. Notice the 5.5% mark-up:

Below is an example from an ATM operated by Santander. They charge a 5% mark-up:

Let’s Wrap This Up

Tourists aren’t the only people who fall for this one. Our friend who is originally from the U.S., decided to take advantage of the great exchange rate right now and take some pesos out of an ATM in Mexico using his U.S. debit card. He didn’t do as well as he hoped because he accepted the DCC offer.

Our friend has been using ATMs in Mexico for years but this is the first time that he had ever encountered a DCC offer. The reason is because his debit card is a Visa and on April 13, 2019, Visa changed their worldwide policy to allow ATM operators to offer DCC to their cardholders.

By the way, Mastercard has allowed it for quite some time now.

So, even if you’re a seasoned veteran at using foreign ATMs, if you’re using a Visa debit or credit card, you might want to take a closer look at the screen before hitting accept.

Before I end this post, I want to thank one of our readers, Mark Emmer, for visiting different ATMs in the area and sending us pics of the DCC offers. Thanks, Mark.

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About the Author

Qroo Paul
Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years before retiring at the rank of lieutenant in 2015. He and his wife moved to Mexico looking to maximize their retirement income. They later started a blog called Two Expats Mexico ( to share their experiences as well as information about the logistical and legal aspects of retiring south of the border.

50 Comments on "Using an ATM in a Foreign Country? How to Avoid Paying Too Much for the Local Currency"

  1. Same thing on using credit cards. Often, we think that the use of a credit card will result in a better conversion rate. But it does depend on who is doing the conversion.

    And finally, don’t forget foreign transaction fees and ATM fees. Hopefully, you will be using a bank that reimburses you for out of network ATM fees and doesn’t charge foreign transaction fees on credit cards. “Travel” credit cards are usually fairly good at not charging foreign fees.

    • We’re planning on talking about the DCC with merchants in another article. They also charge a mark up so we’ve never seen that one work out better either. When they ask if we want them to run the charge through in dollars or pesos, we always say pesos to avoid the mark up.

      Good tip on the foreign transaction fees on cards. We only use credit cards with no foreign transaction fees.

  2. I’ve lived in Mexico City four and a half years and use ATMs with U.S. cards regularly. I have never seen a DCC option. What’s that all about?

    • I’ve only heard people complaining about it the last few months. Before that, not a word.

      • Yep, I just started seeing it myself. Have been accepting because I thought decline would stop the transaction.

      • Shelley Mason | August 13, 2019 at 3:46 pm |

        You guys are the best! Real life scenarios with real life solutions. Thank you.

  3. Great to know. Thank you.

  4. I live in Merida, and use various banks’ ATMs with my Schwab debit card from the U.S., and as a previous poster said, I’ve never seen a DCC option. The ATM simply asks me how many pesos I want, and tells me the fee they charge (which Schwab refunds, so I don’t really care what it is).

    • This is something that wasn’t an issue a few months back. That’s why it took our neighbor by surprise.

  5. Does the DCC option show up at all banks? I use Bancomer and not familiar. Thanks for this article!

  6. alice hesselrode | August 12, 2019 at 1:35 pm |

    Great article. I did not know I could decline the exchange HSBC offered and still get my money. Thanks

  7. Good information. I will look more closely next time. Same thing happens if you transfer USDs to a Mexico pesos account. Plan ahead with your bank exec. to guarantee the exchange rate. Don’t let it arrive by a default currency exchange.

  8. Lyle Gregory | August 12, 2019 at 2:24 pm |

    Timely article. They do this a lot in Europe too and really take advantage of people.

  9. One post recently on Scubaboard mentioned that when the individual declined the DCC offer, the ATM spit out his card without giving him the “standard” option. That’s one report from one Santander bank, but it’s something else to watch for.

    Most of the banks on Cozumel have gone to this scheme. About the only ones I haven’t checked are CIBanco (lowest ATM fees, but not in a convenient location for me) and RED (Azteca/Electra).

    Paul, you’ve alluded before to the fact that major grocery stores are a pretty good place to look for ATMs. They are inside an establishment with a lot of traffic so there isn’t a lot of opportunity for anyone to tamper with them. Plus, there are usually several major banks represented, so you can check fees and DCC requirements across several banks in one place.

    • I just read through the DCC guidelines issues by Mastercard and that “spitting out thing” would be a clear violation…lol. Cardholders are supposed to have the right to refuse.

      That’s a great tip about about being able to check multiple ATMs at once at a grocery store. Thanks for sharing.

  10. Marien Kaifesh | August 12, 2019 at 2:51 pm |

    Going to Cancun in 3 weeks; thanks for the heads-up on this! I’ll pay attention at the ATM at the airport next time. (I was already aware of the credit card ‘scam’ with other vendors — like restaurants — where they ask if you’d like to pay in pesos or US$.)

  11. Re grocery stores, if you have a Mexican bank account and pay the cashier at the grocery store with a local debit card, you can ask for up to 2,000 pesos as instant cash back. No fees. And of course no exchange rate to worry about because it’s pesos from a peso account. I just opened a local bank account at Intercam and like the local cash back option because I can ask the cashier for small bills. The ATM usually gives me 500 peso bill, which can be hard to use.

  12. Sharon Helgason | August 12, 2019 at 4:20 pm |

    Is this applicable to only Quintana Roo or all of Mexico?

  13. We are in Ajijic and have used the HSBC ATM for a number of years. The last 6 months or so I have noticed one of their 2 ATMs offering the DCC option and I would decline it. About a month ago their other machine was offering the lower conversion rate with no option to decline it. It just told us what the rate would be…it was under 18 so I cancelled the transaction. We have changed to a Scotia ATM even though it isn’t convenient. I will check HSBC again to see if it now has the option to decline if it truly is a violation not having the option.

  14. Hola from Canada
    Hi Paul
    Can’t thank you enough for this amazing blog and site. We have learned more from reading your blogs and following your links SINCE finding you and signing up than anything we’ve researched before. Keep up your incredible work.
    Randy and JANET

  15. Kristia Snider | August 12, 2019 at 6:09 pm |

    Thank you! I’ve never noticed this charge before but will from now on!!

  16. I also use my U.S Debit Card at Bancomer. The other day, I withdrew 5000 pesos. The actual exchange rate at that minute was 19.44… Bancomer gave me ONLY 18.0 exchange rate. PLUS, they have TRIPLED the usage charge from 27 to 81 peso per transaction. I have never seen an option on the screen to accept or decline the DCC rate!

  17. Wayne Miller | August 12, 2019 at 8:48 pm |

    TransferWise now offers a debit card that gives a much better exchange rate than most banks and only a 2% fee (typically 3%)

  18. BANAMEX does not give the DCC option. They provide Mexican pesos at current market rates which are posted on an LED board near the ATMs.

    • If you’re using an ATM, the rate is determined by the financial institution that issued the card, unless you choose to allow the ATM operator to do it, which is DCC.

  19. Appreciate the heads-up Paul!

    I’ve long wondered what others were talking about when they warned folks about the ATM offering an exchange rate. Using a Visa debit at Intercam and CIBanco (prior to April 13), my wife and I thought we were missing something, or others were just nuts! Now we know to be aware of this when we return.

    And I’ve not read through the previous responses, but we are very happy using the Schwab card because the ATM fees are removed each month, great benefit!
    Thanks again

  20. Susan E McCrary | August 15, 2019 at 1:14 pm |

    The information is appreciated. Did you buy a house or are you renting? How did you decide?

    • We bought a condo four years ago. We knew we wanted to live in Mexico and we didn’t want to throw money away renting. Based on other condo sales in our area, our condo is worth more now than when we bought it, so we view it as an investment.

  21. Gabriela Rojas | August 16, 2019 at 7:55 pm |

    Can you tell me what is the best bank in the US to have an account while visiting Mexico where you have the least charge in international transactions? and from what bank in Mexico you withdraw money in their ATM if you do so? Thank you!!!

    • Charles Schwab Bank is considered the best because it doesn’t charge any foreign transaction fee. It also offers unlimited reimbursements for ATM fees worldwide.

      To answer your second question, we use our Mexican bank ATM when withdrawing money in Mexico. We maintain bank accounts in both countries and move money between them when the exchange rate is to our benefit.

  22. Just ran across this recently at Santander. I cancelled and it gave me my card back, but then charged the withdrawal against my account any way! Had to dispute it w/ Schwab, and it was refunded in 10 days. The other day I accidentally did an ATM withdrawal from Santander again (because I’m old and my memory — blah, blah) and I hit buttons too quickly and only after the cash was coming out did I realize they had just dinged me 5%.

    At least now I know what this is and that it is optional. I may need to finally take action on the whole Mexican banking account thing…

    Thanks for the heads up on this!

  23. More (and new) bad on Scotia Bank: Last June I tried to withdraw 6000 pesos from the Scotia branch at Constityuentes and 10th Av, and got a screen notice that the bank had done the exchange rate calculation for me and that my 60000 peso withdrawal would amount to a $345 USD withdrawal from my B of A account, and asked whether I accepted or declined the amount. I had already calculated that the amount would be $314 based on the XE currency Exchange site of 19.1 pesos per dollar ( so 6000/19.1 = 314 USD, so I declined, and the ATM returned my card and cancelled the transaction. I tried to withdraw the same amount again a few days later, got the same screen, and again declined the transaction, but the ATM gave me 6000 pesos anyway. Fortunately, a quick call to B of A confirmed that the amount taken from my account was only $314 USD, not $345. So, they’re apparently offering you a ‘service’ (at an exorbitant rate), hoping that some unaware person will accept the conversion and enrich Scotia bank. I suspect that most tourists would fall for this, so it’s a scam aimed at the unwary.

    Anybody who doesn’t pay attention to the screen, or is confused, or simply doesn’t know the exchange rate, can get scalped – in my case it would have been $31 USD taken from me and pocketed by Scotia bank. The exchange rate, however, is supposed to be determined by your bank, not by Scotia bank – when B of A gets the 6000 pesos withdrawal notice, it calculates the amount in dollars based on the bank rate (like the XE rate above). It’s like when a restaurant or store asks you whether you want the check in dollars or pesos, you should ALWAYS say PESOS – if you say ‘dollars’, the store or restaurant sets the exchange rate (which is guaranteed not to be in your favor – if the bank rate is 19 to the dollar and the restaurant converts it to its own exchange rate of 17 to the dollar, you lose money – and that’s what’s happening here, where Scotia bank is converting for you but at a lower rate than your bank would give – here, I could have lost $31 USD on a simple bank withdrawal. Because this same Scotia branch fouled-up one year ago by charging me 5$ (99,99 pesos at the time) while using a B of A fee-free ATM it’s beginning to sound like a pattern of fraudulent behavior, so I reporting it to B of A as ‘bank fraud’, and hoped to put an end to it. B of A refunded all fees for the month, and the $5 Scotia ATM charge went away a month or so later.

    The Take Home Lesson: if you see the conversion notice onscreen at Scotia bank, DECLINE it – let your bank in the US make the conversion, not Scotia bank. Suerte!

  24. also does this if you pay with a CC and they are even more sneaky about it. You have to be sure to choose to pay in MXN pesos and not USD or paypal will do the conversion instead of Visa and it is a much worse exchange rate.

  25. Thanks Q-Paul. I live in San Miguel and am seasoned when it comes to using local ATMs. But I fell for this “option” the last two times I withdrew pesos. Thanks to this blog, I sure won’t make that mistake again.

  26. Thomas A Channing | August 28, 2019 at 6:27 pm |

    How would this apply to a Direct Express Mastercard issued by Social Security from Comerica bank?

    • Hi Thomas,

      It was an interesting question, so I looked into it. It turns out that as far as DCC is concerned, it works like any other Mastercard debit card, meaning you may be offered an alternative exchange rate by the ATM operator when you’re using it abroad.

  27. Even if your bank doesn’t charge a fee for an out-of-network withdrawal, the bank issuing the money might charge a flat fee. Not sure if some cards would refund that fee as well (like Schwab as listed in earlier comments).

    When paying by credit/debit card, some charge a 3% processing fee. Often the restaurant/store/hotel chalks up the 3% as the cost of doing business, others pass the charge along to the guest.

    In many states, gas stations have a cash price and credit price, so it’s not totally uncommon in the US either.

  28. Great article! I have not seen this DCC screen in Cancun yet. I’ve been here for 20 years in Cancun and have picked up additional tips….

    1) Bank of America started nailing clients with a 3% foreign exchange fee back around 2016. I dumped them.
    2) ScotiaBank Mexico has a USD $5 fee for debit card withdrawals. Another one bit the dust.
    3) TD Bank in the USA has an excellent account for us to use down here. Keep balance at a minimum USD $2500 every month and no foreign exchange fee, and they pay back any ATM fee also.
    4) Banjercito (Mexico Military Bank ATM) has ATM fee that is the least I have seen… under 19 pesos. You will find them near the various military bases. I always use the one just outside of Cancun at Puerto Juarez. Nice to have an armed Navy guard about 50 feet from the ATM machine at the main gate. I used to sometimes pull out 10,000 pesos but in 2 transactions… 7,000 and 3,000 (7,000 is the max you can pull in a single transaction) but I noticed that the exchange rate sucked on the 3,000 peso transaction. Now I know that 5,000 and 5,000 always gives me an excellent rate.
    5) HSBC has screwed me many times without showing the DCC screen. Just a horrible exchange rate and high fee.
    6) Some larger Bancomer banks have a “deposit” ATM where you can actually feed the machine cash. Really useful if you need to pay rent to a Mexican landlord that has a Bancomer account. You can also deposit cash at a Chedraui to pay some Mexican debit cards at zero commission.

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