Since I frequently write about living overseas, embracing the digital nomad lifestyle, and exploring various countries, I often receive inquiries regarding travel money management. Questions like, “Do you acquire a local banking account?” “Where should I secure my funds back home for easy access?” “Should I exchange currency before arriving?”
The crucial inquiry to address is how to sidestep travel fees when obtaining or swapping currency, as well as minimizing fees associated with credit card usage.
Accessing your travel funds has now been simplified to a select few options. In most locations, it’s advisable to carry a small amount of cash and access the remainder with your ATM card, using a debit or credit card whenever feasible. Additionally, you should utilize a credit card for larger expenses (such as local flights, trains, car rentals, or accommodations) and in scenarios where you may need protection if something fails to materialize (like a local tour).
The challenge is that banks love to impose fees nearly as much as airlines do, regardless of whether the transaction necessitates any effort on their behalf. If you aren’t cautious, these fees can accumulate to the cost of a night’s stay every few weeks, impacting your budget.
I will detail impactful strategies, but these are methods to avoid novice travel blunders that could deplete your funds—money that could be allocated towards enjoyable experiences instead.
1) Ensure you only utilize credit cards that do not charge a foreign transaction fee.
2) Opt for ATMs to withdraw foreign cash rather than currency exchange counters, while keeping local fees minimal.
3) If possible, acquire a debit card that offers rebates on local fees or at least does not charge them at their end.
4) Always reject the bank’s deceptive “currency conversion” offer and make charges in the local currency.
5) Steer clear of dubious ATMs and have contingency plans if your card gets swallowed, misplaced, or stolen.
6) Aim to use credit cards that provide travel rewards of some sort. This way, vacations won’t remain a rare occurrence.
Let’s delve into these points in detail so you can become an astute traveler in the future, retaining more of your funds while journeying through foreign nations.
Avoid Credit Card Travel Fees
When I initially began acquiring branded travel credit cards, a substantial portion of them charged a foreign transaction fee every time they were used, which is essentially a form of theft that yields no benefits in return. Fortunately, most cards have eliminated these fees as it resulted in the loss of numerous customers.
It appears peculiar that a travel-oriented card would penalize you for doing just that—traveling—but this is still true for some. The most prominent example is the Southwest card from Chase. It’s still beneficial for the sign-up bonus and for checking a bag free on this dwindling airline, but you should stash it away whenever you are outside the U.S.
Otherwise, scrutinize the fine print if you possess an entry-level card with no annual fee. These are more likely to impose an additional 2.5% to 3% fee if you err in using them beyond your home country. This encompasses some (but not always all) cards associated with JetBlue, Alaska Airlines, and Marriott Bonvoy (“Bold” version).
Some cash-back rebate cards do this too, canceling out any cash you might receive. Certain debit cards can penalize you twice, particularly the one from PayPal that offers a less favorable exchange rate than banks, then charges a foreign fee additionally. They even levied a “foreign transaction fee” when I used their card in Panama, despite Panama utilizing the U.S. dollar!
Withdraw Money From ATMs
I’m always astonished at how frequently I encounter advice articles and tour operator guidelines suggesting individuals procure foreign currency from their bank prior to travel. This is an excellent method to ensure you start your journey in a financial deficit before even landing!
In 99.5% of instances, you will obtain a superior exchange rate from an ATM upon arrival than you would in your home country. You will also receive a better rate from that machine than from any local currency exchange booth, regardless of whether they advertise “no commission” or not. (They profit from the spread on each transaction, hence they have no incentive to provide you with the actual bank rate.)
The only instance to utilize an exchange booth is if you need to convert money back because you’re departing. Then, if you lose a small amount to secure cash for elsewhere, it’s justified. You certainly don’t want to traverse with Albanian lek or Vietnamese dong.
Remember to consolidate your withdrawals to reduce fees and refrain from withdrawing a substantial amount of cash for a short trip, particularly if you’ll be