Originally Posted by
Diplomatico
Many (if not most) credit cards charge an 'international transaction fee' of 1-3% when purchasing in a foreign currency. Choosing to pay in dollars will avoid incurring that fee.
I don't remember where, but I remember reading some cards actually charge the 1-3% when purchasing in a foreign country, even if you are paying in the currency of the credit card. So if you buy something in the UK on a US credit card, and the merchant charges you in US dollars, you are still charged the 1-3% on top because it is a foreign transaction.
Here we go..
USA Today article.
...a 2% fee on purchases made outside the USA, even when the souvenirs are priced in U.S. dollars.