Since I compose extensively about residing abroad, being a digital nomad, and exploring various destinations, I receive numerous inquiries about accessing travel funds. “Do you open a local bank account?” “Where should I store my funds back home for easy access?” “Should I exchange currency prior to arrival?”
The crucial inquiry to address is how to sidestep travel fees when obtaining or converting currency, along with avoiding charges when utilizing a credit card.
Your options for accessing travel funds have narrowed to a few straightforward choices. In most locations, it’s advisable to carry some cash and obtain the remainder via your ATM card, using a debit or credit card when feasible. Additionally, utilize a credit card for significant expenses (like local airline tickets, trains, rental vehicles, or hotels) and instances where you require security if something goes awry (like a local tour).
The issue is that banks are almost as fond of fees as airlines are, regardless of whether the transaction genuinely necessitates any effort on their part. If you’re not vigilant, these fees can accumulate to the cost of a night’s accommodation every few weeks, impacting your budget.
I will delve into the significant strategies in detail, but these are the methods to avoid novice travel blunders that could drain your funds—money that could be allocated for enjoyable activities instead.
1) Ensure that you exclusively utilize credit cards that do not impose a foreign transaction fee.
2) Use ATMs for foreign currency, not currency exchange booths, while minimizing local fees.
3) If possible, acquire a debit card that refunds local fees or at least doesn’t impose them on their side.
4) Always refuse the bank scam “currency conversion” offer and consistently charge expenses in the local currency.
5) Steer clear of dubious ATMs and have contingency plans ready in case your card is absorbed, lost, or stolen.
6) Aim to use credit cards that offer travel rewards. This way, your vacation won’t be a rare event.
Let’s explore these topics in detail so you can become a knowledgeable traveler in the future and retain more of your own funds while navigating foreign nations.
Avoid Credit Card Travel Fees
When I initially began acquiring travel-focused credit cards, at least half imposed some form of foreign transaction fee each time a person utilized them, which is a blatant pickpocketing tactic that provides nothing in return. Thankfully, most cards have eliminated foreign transaction fees, as it led to significant customer loss.
It seems strange that a traveler-focused card would penalize you for traveling, but that still holds true for some. The most notable offender is the Southwest card from Chase. It’s still beneficial for the sign-up bonus and allows one free checked bag on this deteriorating airline, but it’s advisable to keep it tucked away when you’re not in the states.
Otherwise, scrutinize the fine print if it’s an entry-level card with no annual fee. These are typically the ones likely to impose an extra 2.5% to 3% charge if used outside your home country. Cards branded with JetBlue, Alaska Airlines, and Marriott Bonvoy (“Bold” version) fall into this category.
Some cash-back cards also partake in this, nullifying any cash rewards you might receive. Certain debit cards will charge you twice. Notably, the one from Paypal offers a worse exchange rate than banks and then adds a foreign fee on top. I was even charged a “foreign transaction fee” when using their card in Panama, despite Panama using the US dollar!
Obtain Your Cash from ATMs
I’m astonished at how frequently I encounter advice articles and tour company guidelines suggesting individuals obtain foreign currency from their bank prior to travel. This is an excellent way to ensure you start off in the deficit even before you arrive!
In nearly all circumstances, you will receive a superior exchange rate from an ATM at your destination compared to what you would get in your home country. Furthermore, you will acquire a better rate from the machine than you will from any local currency exchange, regardless of whether it claims “no commission” or not. (They profit from the spread on every transaction, so they have no interest in providing you with the actual bank rate.)
The only time to use an exchange booth is when you need to convert money back because you’re departing. Then if you lose some to acquire cash usable elsewhere, it’s justified. You don’t want to carry around Albanian lek or Vietnamese dong.
Remember to consolidate your withdrawals to minimize fees and avoid withdrawing a large sum of cash for a brief trip, particularly if you’ll be