Traveling overseas has the potential to be a very pricey proposition. That said, there are several ways to lessen the financial burden of international travel so you can enjoy your trip to the fullest and avoid worrying about money.
There are three primary ways of exchanging currency when traveling abroad: converting cash into local currency before you travel, using a debit card to extract local cash from ATM’s abroad, or simply using a credit card. While some options may be more convenient for certain travelers, there are pros and cons to all three.
According to a study of international exchange rates, travelers abroad can save up to 15% by using a credit card. The advantages of credit cards are that they always provide clients with the best possible exchange rates which are about 15% better than currency exchange companies, and 8% better than the average bank.
There are a range of different credit cards available, some of which offer no-foreign-fee benefits which eliminate the sometimes pricey fees that credit card companies can tack onto international purchases. Credit cards are also great for the major purchases involved in travel such as airline tickets and hotel bookings. If you have a card that offers rewards, you can benefit even more by acquiring points or other perks like cash back when you make major purchases on your card.
Cash and Debit Cards
While credit cards are the most economical way to travel abroad, there are some things that credit can’t pay for. Taxis, small souvenir shops and sometimes even local restaurants won’t accept plastic so cash in hand is quite useful. It’s also possible to get a no-foreign-fee debit card (similar to the credit variety) that eliminates international fees and is the most inexpensive way to access cash funds abroad.
Before you travel, compare local currency exchange rates and be aware of any additional processing fees. Exchange rates can vary drastically with up to a 15% discrepancy in some cases. It’s also important not to exchange more cash than you need. Travelers should only exchange what they feel comfortable carrying around with them, and try to split up larger amounts so that you’re not carrying a lot in one place, such as a wallet.
Some Final Tips
Regardless of whether you’re using cash or credit to finance your holiday, it’s important to contact your bank before you depart and notify them of your travel plans. Travelers who fail to do this may have their services suspended on suspicion of fraud.
Finally, avoid any dynamic currency conversions. This service is sometimes used by local vendors who offer to convert the purchase into your home currency. In some cases this is simply intended as a helpful tool for tourists, but in many other cases it is a convoluted transaction intended to apply unfavourable exchange rates to your purchase. If you want to be sure of the conversion rates, download an app before you depart for your trip and do the calculations yourself.
Image by Paul Vlaar, used under Creative Comms license