The UK uses the Pound, so it goes without saying that you’ll need to pay for everything in pounds. The logical solution to the USD to GBP problem is to exchange USD to GBP and pay with your new pounds. However, there are other options such as withdrawing cash from an ATM in the UK with your US debit card.
Although your bank most likely will charge you a flat fee for using a foreign ATM as well as for converting USD to GBP, this option may actually provide better rates than exchanging cash at the airport or at local exchanges. Some US banks even have relationships with foreign banks, which may wave the flat fee making this option even more cost-effective. Talk to your bank before you leave to see if this is an option.
It is also possible to use a credit card for almost all purchases. If you are a seasoned traveler, then you have heard of a thing called “transaction cost.” This is the cost a credit card company adds to each transaction made outside the US. Your credit card company also decides the exchange rate you will get, usually it’s about an additional 3% charge.
To make things easier there are credit cards that cater to travelers traveling abroad that feature zero transaction fees. If you don’t already have one of these, check with your bank or other providers to see if it makes sense for you to get one to use when you’re abroad.
Unlike the US, every single purchase, no matter how small, that you make with a credit card will require a signature (or a PIN). Be prepared for a somewhat bewildered person at the till if you need to sign, they aren’t always prepared for it because PINs are widely used in the UK for credit card purchases.
When paying at a restaurant you may notice on your bill a charge called “service charge.” This is almost like a tip, however this charge does not always go to the restaurant staff, sometimes it just goes to the restaurant. If you do not want to pay this charge or you want to ensure your tip goes to your server, you may ask to have it taken off your bill then tip your server in cash.