How to Manage Your Money While Traveling Abroad
There’s nothing quite like stepping off the airplane into a brand-new country. But before you can start fully enjoying your adventure abroad, there’s one major thing you need to be prepared for.
And that is how to manage your money while traveling internationally. As someone who has traveled extensively around the world and spends six-plus months a year abroad, this is second nature to me now. But I didn’t always feel that way! Managing your money abroad can have a bit of a learning curve.
Fortunately, it’s not that tricky — you just need to be aware and be prepared. Below, I’ve outlined the most important things to know about managing your money while traveling internationally.
This includes avoiding sneaky foreign transaction fees, ATM fees, and currency conversion fees, understanding exchange rates, having the right amount in cash, protecting your money, and more.
So without further ado, here’s everything that you need to know before your next trip:
1. Get a credit card with no foreign transaction fees
Many credit cards charge a foreign transaction fee of approximately 3%, which might seem small on a $10 or $20 transaction, but can seriously add up over the course of a whole trip. There are many credit cards now that don’t charge foreign transaction fees, so there’s no reason to waste money on this.
I use and recommend the Chase Sapphire Preferred Visa credit card. In addition to offering no foreign transaction fees, this is a great credit card that also allows you to earn travel rewards. Avoid American Express credit cards, because they are not as widely accepted in other countries outside the US.
2. Get a debit card with no foreign transaction fees or ATM fees
Similar to credit cards, most debit cards also tack on a 3% foreign transaction fee when used abroad. This includes card transactions and ATM withdrawals at out-of-network ATMs. In addition to the foreign transaction fee on withdrawals, you might also be charged an extra ATM fee of $5 or more.
This is another total waste of money. Luckily, there are some debit cards out there that offer no foreign transaction fees and automatically refund any ATM fees, like the Schwab Bank Investor Checking debit card. This is my dedicated “travel account” and I use the debit card every time I’m abroad.
3. Notify your bank that you’ll be traveling abroad
This is not always necessary, but it can be worth a few minutes of your time if you don’t travel abroad frequently or you’ve recently opened a new account. The last thing you want is for your credit card or debit card to be flagged for fraud and have the transaction blocked when you’re trying to use it abroad.
You can simply call the bank before your trip and let them know you’ll be out of the country, and tell them the dates you’ll be gone so your account will not experience any interruptions.
4. Research the local currency in advance
It’s always a good idea to familiarize yourself with the local currency before a trip. Have an idea of the exchange rate and what things will cost in the local currency. It’s also helpful to download a currency conversion app you can use while you’re traveling. Sometimes the exchange rate can be a bit tricky.
For example, I recently traveled to Colombia, where the official currency is the Colombian peso. At the time of my trip, the exchange rate was 1 USD to 3,650 COP. This meant I was regularly handling large bills and having to do complex calculations to figure out the amount of money I was actually paying.
5. Don’t bring a large amount of cash to convert into the local currency
One mistake I see travelers make all the time is bringing a lot of cash to convert into the local currency. For example, if you’re American, you might think it’s a good idea to bring 500 USD on your trip to the UK to convert into GBP. However, this would be a mistake because the UK is a largely cashless society.
Even if you were traveling to a destination where cash is still king, bringing money to be converted means that you will pay hefty currency exchange fees. It’s usually much better to make withdrawals from an ATM in the local currency once you arrive, rather than bringing a lot of money with you in advance.
6. Be wary of currency exchange places
You’ll see currency exchange kiosks everywhere when you travel, including at airports and train stations, and on the street. So convenient, right? Wrong! As I just mentioned, these places are a huge rip-off.
They might advertise “zero commission” on conversions, but you’ll still always pay an inflated exchange rate, sometimes as much as 20% higher than the real exchange rate! Again, it’s almost always a wiser idea to withdraw local currency from an ATM once you arrive rather than exchange money.
7. Always opt to pay in the local currency
When paying by card abroad, many card readers will ask if you want to pay in USD or the local currency. Always choose the local currency! While it might seem convenient or logical to pay in USD, this is actually not a good idea because the price is converted into USD from the local currency at a marked-up rate.
The same is also true for cash, sometimes. In some destinations, you might see prices (at a souvenir store, for example) in the local currency and USD, and there’s no mark-up. If this is the case, you can pay with USD. But often, the USD price is worse than the local currency price, so be sure to double-check!
8. Don’t take out more cash than you’ll actually need
Some countries are more cash-heavy than others. In countries where you need to pay with cash in most places, you’ll want to have enough cash on hand at all times to cover your expenses, but never too much. It can become a risk if you’re carrying more than a few hundred dollars of cash on you.
Personally, I never have more than $250 in cash on me at any given time. And in countries where cash isn’t as necessary (like most countries in Europe), I typically don’t keep more than $50 of cash on hand. This is because I don’t want to be stuck with currency I can’t spend at the end of my trip.
9. Never accept the ATM’s inflated conversion rate
If you are withdrawing money at a foreign ATM, it will usually give you two prompts. One is about accepting the ATM’s usage fee. If you have a debit card that refunds ATM fees, this isn’t an issue. The other is about accepting the ATM’s conversion rate. This is an option that you always want to decline.
The ATM will present you with an unfavorable exchange rate. If you decline this, you will be charged the real exchange rate set by the bank, which is always going to be a lot better.
10. Keep your cards and cash in a secure place
The last thing you want is to be pickpocketed while traveling. (By the way, I have a bunch of tips about avoiding pickpockets that you might want to read.) It’s very important to keep your cards and cash in a secure place. I recommend a sturdy wallet for cards and a zippered change purse for cash and coins.
These should be kept in a zipped-up bag that is kept close to your person at all times. Don’t get complacent and leave your wallet in your back pocket or loose cash floating around in an unzipped purse!
11. Always have backup cards and cash for emergencies
Never keep all of your cards and cash in one place when you travel. It’s unlikely, but even if you take precautions against pickpocketing, you could still be unlucky and have your bag or wallet stolen. If you lose all your money, it can put you in a stressful position while traveling in a foreign country.
Instead, it’s a good idea to split things up. Leave a backup debit card and credit card in your hotel safe (I leave the ones that do have foreign transaction fees), along with a small amount of cash just in case.
12. Set up contactless payments and use them whenever possible
Contactless payments are becoming more and more popular around the world, especially in certain countries in Europe and Asia. Set up your credit card with Apple Wallet or Google Wallet before your trip, so you can simply tap to pay with your cellphone, rather than having to get out your card or cash.
Tapping to pay is standard in many places, whether you’re paying the fare to hop on the local subway or tram, or buying a cup of coffee. It’s more secure since you don’t have to get out your wallet and fish around for your card or cash, plus it protects you from potential card skimmers on card machines.
13. Download your banking apps before you go
If you haven’t already, be sure to download apps for your bank and credit card company before you go. While you’re at it, double-check to make sure that you can smoothly log in to these accounts.
When traveling abroad, it’s good to have access to your banking apps in case you need to contact customer support, report a card lost or stolen, or put a freeze on an account with a lost or stolen card.
14. Enable instant transaction alerts
One great way to keep an eye on your accounts while traveling is to set up instant transaction alerts. This is something you should be able to do in the settings of your bank or credit card account.
This ensures that every time your card is swiped, tapped, or used at an ATM, you will receive a notification on your phone (or a text message) alerting you about the transaction. This makes it easy to spot if anything is amiss, and it’s also quite helpful for keeping an eye on your spending for budget purposes!
15. Make a plan for handling leftover currency
If you carefully plan your ATM withdrawals, you shouldn’t end up with too much extra cash. No matter what, though, I always find that I have a little leftover currency by the end of a trip. You might have trouble converting small bills, and you usually can’t convert coins, so you’ll want to spend them!
My go-to is buying snacks and a drink at the airport before I leave. You could also use leftover currency as a tip on the bill of your final meal at the end of a trip, or to buy a small, last-minute souvenir (or keep the currency itself as a souvenir!) Many airports also have charity donation bins for your loose change.
How to Manage Your Money While Traveling Abroad
This guide showed you how to manage your money while traveling abroad.
If you haven’t traveled internationally before, or it’s been a while since your last international trip, you might be feeling a little overwhelmed about all that it entails. But luckily, managing your money abroad is not that difficult once you know what to expect and take the proper measures to prepare.
Enjoy your trip!
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