Brits who choose to pay in pounds sterling for goods and services on their cards when overseas can pay through the nose for the convenience, new research claims.

The practice is currently costing £60 million as local businesses, as well as card providers, are able to set their own conversion rate. This often turns out to be more than the going rate.

Nationwide building society estimates that in July alone, Dynamic Currency Conversion cost Brits an extra £5 million.

The system is widely in use in restaurants, shops, car rental companies and hotels in Spain, Italy, Ireland, Germany, France and USA.

Stuart Bernau, Nationwide's executive director, said: "We want to raise the awareness of all users of cards abroad about the potential to lose out from this so called 'service'."

"We would advise people to check any slip or bill before signing, or entering their pin. If a retailer overseas has converted the bill into pounds sterling with their own additional conversion fee attached, people should ask to be billed in the local currency."

Brits abroad will also face charges for withdrawing money from ATMs and foreign currency charges on purchases made.