Financial Tips for Traveling Abroad
June 18, 2021
Travel, especially abroad, can become very expensive, very quickly. Many of us give up the opportunity to travel because of the financial burden it may cause. Fortunately, there are strategies for traveling for less. Check out these tips on how to see the world without breaking the bank.
Get the best exchange rate.
There are three ways to exchange currency: converting cash at a bank before your trip, using a currency exchange service like the ones in airports, or simply using a credit card, in which case your money is converted automatically with a purchase.
According to an exchange rate study conducted by Card Hub, international travelers can save up to 15 percent by using a credit card. More specifically, major worldwide credit networks automatically provide the best exchange rates possible — currently 14.7 percent better than the currency exchange companies that operate out of airports and 7.9 percent better than the average major bank.
Get a no-foreign-fee credit card.
Over 90 percent of all credit card issuers charge foreign usage fees, which inflate the cost of any transaction processed outside the United States. No-foreign-transaction-fee credit cards are perfectly suited to overseas spending. Follow these guidelines to use no-foreign-fee cards to their full advantage:
- Get your card before booking flights, hotels and activities. Foreign fees apply to purchases made through foreign-based companies whether you are outside the U.S. or not. Make sure your credit card issuer does not charge these types of international fees before you book your trip to avoid surprises on your statement.
- Check to see how much coverage your credit card includes, remembering that most companies do not provide worldwide coverage.
Withdraw cash before you leave.
If you'd rather not worry about finding an ATM as soon as you arrive in a foreign country, convert some cash at your local bank before you leave. Keep in mind that you should:
- Compare bank exchange rates to get the best currency conversion.
- Watch out for fees and make sure to inquire about extra charges before agreeing to a conversion rate.
- Convert just the right amount. Get enough cash to comfortably cover your initial expenses but not more than you feel comfortable carrying.
Consider these tips.
Regardless of which debit or credit card you use while traveling overseas, it's important to take these precautions:
- Call your issuer before leaving. Make sure to notify your bank of the exact countries and territories where you'll be traveling as well as the dates you’ll be abroad to prevent your cards being suspended for suspicion of fraud.
- Avoid dynamic currency conversion. Merchants may offer to convert the price of a purchase from the local currency into U.S. dollars, but some merchants push dynamic currency conversion in order to apply an unfavorable exchange rate to a transaction and increase their profits. Avoid that by only signing bills and receipts expressed in the local currency. Use a smartphone for currency conversion on the go.
- Check if your trip is covered. Travel insurance can be a great way to reduce any unexpected expenses when you travel abroad. Between lost luggage and missed connections, travel can present many financial risks. Travel insurance can help put your mind at ease.
Overseas travel can be expensive, but it’s possible to minimize costs with discipline and careful planning.