When I was travelling in Europe this past spring, I discovered that many credit card issuers charge the consumer a foreign transaction (FX) fee on top of each purchase. Any purchase made at a store, restaurant or other vendor outside of Canada or the United States may be subject to a FX fee.
It typically ranges from 1% to 5% of the transaction. These charges are often buried deep in the terms and conditions of your credit card agreement; and in the case of Canadian credit cards, the fee is wrapped into the original charge, so you will not notice it unless you do the math.
In addition to FX fees, many tourist establishments offer the option of paying in your home currency. Be wary of this option, as the currency conversion rates are almost always worse than the rates you would get if you simply processed the charge in local currency and you will still be charged a FX fee on top of it.
A good rule of thumb is to have the card charged in the local currency to avoid conversion fees and to choose a card that does not charge foreign transaction fees for all purchases made abroad. You can learn more about this issue and your options through the following articles: