Traveling abroad is an exciting experience, but knowing how to handle your finances when you’re over there is important for a smooth trip. Here are 5 tips for traveling abroad.
Are you planning an international trip? You might think it’ll be easy to pay for everything with your credit or debit card—after all, we live in the age of convenience. But paying with plastic isn’t always the best choice when it comes to convenience and safety. Not to mention what it could cost you in fees.
Read these five tips before you get to the airport and you’ll be rewarded with a cheaper, easier travel experience.
# 1 Protect your credit card account number and debit card PIN by using cash instead
Credit and debit card fraud can happen anywhere, but you’d rather not have to deal with it on vacation. So while you’ll want and need to use your cards for many travel-related expenses, such as a hotel or car rental reservation, you should use cash as much as possible for smaller purchases.
Cash is a better option in many scenarios because it doesn’t expose your financial accounts to the risk of theft. Restaurants are especially vulnerable to this kind of theft because the server usually disappears with your card to run it through the machine. This is less common in Europe, where many restaurants utilize portable card readers that the server brings to the table, but you should still be cautious.
If you are going to pay with a card, make it a credit rather than a debit card. The latter takes the money from your account immediately, making it harder to get back, whereas a credit card transaction is just an “IOU” and most credit cards offer protection against stolen purchases.
#2.Get a credit card with no foreign transaction fee
You’ve probably thought about getting an international roaming plan for your cell phone, but have you considered whether your credit cards are optimized for overseas use?
Credit cards have different features, perks, and fees. You may already have a couple cards in your wallet, they may not be the best ones for traveling abroad. Consider opening an account with one of the best credit cards for international travel. The main thing to look for is a card without foreign transaction fees. Of course, you should never open a credit card if you believe you’ll have to keep a high balance on it. That could end up costing you a lot more than international fees.
Every time you convert one currency to another you’re subject to the current exchange rate. Money-changing stores and banks profit from keeping the difference between the rate at which they purchase your American dollars and the rate at which they sell you foreign currency. This can be a big deal or not, depending on how favorable or unfavorable the exchange rate already is. For example, when traveling in Europe your dollars will go further in non-Euro countries than in EU countries that use the common currency.
If you use a credit card that charges foreign transaction fees, you’ll pay your bank an extra two-three percent of every purchase you make. That’s on top of whatever profit they made from exchanging your currency. So, if you plan to go abroad more than once in your life, a travel credit card is a good investment even if it charges an annual fee. Depending on how much you spend overseas, you’ll pay less for the annual fee than you would in foreign transaction fees. And many travel credit cards come with other perks such as concierges to help you make travel plans.
#3.Look for the best exchange rates before you buy the local currency
In both your departure and arrival airports, you’ll pass plenty of gleaming currency exchange kiosks. The convenience and impulse to prepare for everything on a trip make it tempting to stop and trade in some of your American cash. However, you should avoid buying money at the airport or in any other location that screams tourist.
Currency exchange businesses make money by giving you a less favorable exchange rate and sometimes they charge additional fees, much like the foreign transaction fees you want to avoid on credit card purchases.
My favorite place to get local currency is from the ATM. You’ll generally get the best exchange rate that way and it’s just as convenient as a kiosk (airports have ATMS, too). However, the ATM may charge a fee to take out money, and your bank may have additional fees for using your debit card overseas. Check with your bank before you leave. The best way to minimize fees is to withdraw as much as possible at one time and avoid frequent trips to the ATM.
Another convenient option is to buy currency online through Travelex. You have to plan ahead and allow enough time for delivery or pickup, but next-day shipping is free when you spend at least $1,000. Travelex promises the lowest online price in the US, so you can be assured of getting a good exchange rate. You can exchange any amount of US dollars for the currency of your choice and pay with a credit or debit card. In addition to the shipping option, pick-up is available at Travelex stores across the country.
#4. Notify your bank and credit card companies of your travel plans
About a week before you leave, get in touch with your bank and your credit card companies. Tell them you plan to use your debit and credit cards overseas. You may be able to do this online through your account dashboard. For example, when I log in to my Barclaycard account, there is a “Travel” option under the “Services” menu. From there, I simply need to add my destination(s) and travel dates to create a notification. This protects you against the possibility of having your card declined because your bank isn’t sure if it’s being used by you or by a thief. If you do it the old-fashioned way and call, you can also ask about any other fees you may incur.
After you’ve put so much effort into avoiding unnecessary fees when you spend money abroad, you don’t want to throw your cash away on American-size tips. Don’t worry—this doesn’t make you stingy. Servers, bartenders, cabdrivers and other service industry workers usually make more in other countries than their American counterparts.
Some foreign restaurants will bring you a bill with a service charge already added. Make sure you check before leaving more. In most countries, it’s normal to round up to the nearest even number or to leave about five percent of the total.