Since I frequently write about living abroad, embracing the digital nomad lifestyle, and traveling globally, I receive numerous inquiries concerning access to travel money. “Do you obtain a local bank account?” “Where should I keep my funds back home for easy access?” “Should I exchange currency before my arrival?”
The crucial question to resolve, however, is how to minimize travel fees associated with obtaining or converting money, as well as avoiding charges when using a credit card.
Accessing your travel funds has streamlined to a few straightforward options. In most locations, it’s wise to carry some cash while accessing the remainder with your ATM card, utilizing a debit or credit card whenever feasible. Additionally, you should rely on a credit card for larger expenses (such as local flights, train tickets, rental cars, or accommodations) and in scenarios where you need protection if an arrangement falls through (like a local excursion).
The issue is that banks are fond of fees just as much as airlines are, irrespective of whether the transaction necessitates any effort on their end. If you’re not cautious, the fees can accumulate to the cost of a night’s lodging every few weeks, adversely impacting your budget.
I’ll delve into the significant impact strategies in detail, but these are the methods to bypass rookie travel blunders that could drain your finances—funds that could otherwise be spent on enjoyable activities.
1) Ensure you exclusively use credit cards that do not impose a foreign transaction fee.
2) Utilize ATMs for foreign cash instead of currency exchange windows, while keeping local fees minimal.
3) If possible, obtain a debit card that refunds local fees or at least doesn’t charge them on their end as well.
4) Always decline the bank’s deceitful “currency conversion” option and always charge expenses in the local currency.
5) Avoid dubious ATMs and have alternative plans in place in case your card gets captured, misplaced, or stolen.
6) Attempt to use credit cards that offer some travel rewards. This way, your vacation isn’t a rare experience.
Let’s explore these in depth so you can become a savvy traveler in the future and retain more of your own money while traveling through foreign nations.
Avoid Credit Card Travel Fees
When I initially began acquiring branded travel credit cards, at least half of them imposed some type of foreign transaction fee each time a person utilized them, which is a sheer robbery that offers nothing in return. Fortunately, the majority of the cards have now eliminated foreign transaction fees since this caused them to lose a significant number of customers.
It seems peculiar that a card intended for travelers would penalize you for traveling, but this situation still persists with some of them. The most prominent example is the Southwest card from Chase. It’s still beneficial for the sign-up bonus and for checking a bag for free on this declining airline, but it is advisable to keep it in a desk drawer whenever you’re beyond U.S. borders.
Otherwise, scrutinize the fine print if it’s an entry-level card lacking an annual fee. These are the cards most likely to charge you an additional 2.5% to 3% if you make the error of utilizing them outside of your home nation. This includes certain (but not necessarily all) cards affiliated with JetBlue, Alaska Airlines, and Marriott Bonvoy (“Bold” version).
Some cash-back reward cards also do this, negating any cash you received back. Certain debit cards can penalize you twice. Most notably, the Paypal card that provides you with a worse exchange rate than banks and additionally charges a foreign fee. They even assessed a “foreign transaction fee” when I used their card in Panama, even though Panama adopts the US dollar!
Acquire Your Funds From ATM Machines
I’m often surprised by the frequency of advice articles and tour company guidelines suggesting that individuals should secure some foreign currency from their bank prior to their trip. This is a guaranteed way to ensure you begin your journey at a disadvantage before you even arrive!
Chances are about 99.5% that you will achieve a better exchange rate from an ATM upon arrival than what you could get in your home nation. You’ll also receive a superior rate from that machine compared to any local currency exchange booth, regardless of claims of “no commission.” (They profit from the spread on each transaction, so they have no incentive to provide you with the actual bank rate.)
The only instance in which to utilize an exchange booth is when you need to convert money back because you’re departing. If you end up losing a bit to secure cash for use elsewhere, it’s justifiable. You don’t want to be traveling with Albanian lek or Vietnamese dong.
Remember to consolidate your withdrawals to keep fees down, and avoid withdrawing a large amount of cash for a brief trip, especially if you’ll be
