You’ve been working hard to save up for your big trip overseas, and you’ve planned everything meticulously to make your money last. You’ve compared prices for hotels and Airbnbs, considered the benefits of a rail pass, and even found the perfect combo ticket to visit all the amazing museums.
But one thing you need is to spend money abroad without fees, and it’s very necessary. That includes deciding whether to use cards or cash when making payments abroad. As seasoned travelers and consumer advocates, we have the advice you need on how to be smart with your cards while you’re exploring foreign lands.
How to spend money abroad without fees
Below are expert ways to get around foreign currency fees while you spend money abroad:
1. Sign up for a card with zero fees
When you use your debit or credit card in another country, they usually hit you with a fee for converting the currency. But there are many cards out there that don’t charge these annoying fees. If you haven’t already got yourself one of these cards, it might be worth signing up before you embark on your trip abroad. So, make sure to always travel with a credit card that has no foreign exchange fees.
Regarding debit cards, you could be facing triple fees, including the currency exchange fee, a fee from your bank for using an ATM abroad, and a fee from the foreign bank’s ATM. There are some debit cards out there that won’t take foreign transaction fees and won’t even charge you when you withdraw cash from an ATM abroad. Some cards can even reimburse you for the money you get charged at an ATM.
Note that some no-foreign-transaction-fee credit cards come with a hefty annual fee. So before you jump on the bandwagon, make sure you crunch the numbers and see if the savings outweigh the costs.
If you have a premium account, there’s a chance that some of these perks come bundled with the credit or debit card you already own. So check it out before you go looking for a special card.
2. Pay with a credit card
Even if your credit card doesn’t give you a free pass on foreign transaction fees, swiping it is still a smarter move than exchanging all your cash. Credit cards have the best currency conversion rates. Discover cards might not be all that popular outside the US. But there are plenty of other cards that are widely accepted around the globe, including Visa and Mastercard preferred by merchants. You’ll find that many of them also accept American Express.
While it’s always a good idea to have some cash on hand, you might not need as much as you think because credit cards work in most countries these days.
3. Pay in local currency if you can
When you’re making a purchase with your card, the merchant might ask whether you want to pay in U.S. dollars or the local currency. Your gut might tell you to go with the greenbacks but here’s some piece of advice for you to help you spend money abroad without fees. Go for the local currency. It turns out that the U.S. dollars can actually cost you more. The banks and merchants have to squeeze a bit more money out of your pocket. So play smart and stick with the local currency.
4. Don’t fall for the airport currency exchange trap
A physical card might be your go-to for paying those hotel bills and treating yourself to some tasty meals. But let’s be real, you need physical cash for things like tips and haggling at the local market. So, where do you get the cash? Anywhere but not the airport.
Stay away from those airport currency exchange booths if you can. Those currency exchange providers in the arrival area can charge you a whopping 15% extra just to convert your money. Alternatively, go to an ATM at the airport before you make your way to your hotel.
Now, you need to avoid annoying ATM fees. Some ATMs have low withdrawal limits, like a $100 limit per transaction. So avoid those and find yourself an ATM that lets you take out a larger amount of cash in one go. That way, you save yourself from paying multiple fees.
5. Give cash dollars a shot
It is not every situation that requires you to exchange your cash for local currency. Sometimes, cash dollars can work in foreign lands. In certain countries, they’re valued at the same rate as the local currency. But before you make a payment, make sure you know the exchange rate.
You should first offer to pay in dollars to help you spend money abroad without fees. That’s because many people would be eager to get their hands on dollar bills, and they might just give you a fair exchange rate or even a better deal.
Read also: How to make money returning items
Is it better to pay by card or cash abroad?
The advantage of using a debit/credit card abroad is that you won’t pay foreign transaction fees whenever you spend. While some won’t charge fees for cash withdrawals, you will be charged interest from the transaction date when you use a credit card.
Do debit cards have foreign transaction fees?
Debit cards can have foreign transaction fees abroad and the typical fees are 1% to 3% of the purchase amount. Many banks also charge for ATM withdrawals.
Is it best to pay in local currency when abroad?
You can avoid currency conversion fees abroad when you pay in local currency whether you’re spending or withdrawing cash from an international ATM.
Does Visa charge a currency conversion fee?
Visa charges a currency conversion fee of 1% and an extra fee is added by the card issuer, typically about 1% or 2% (varies according to the card issuer).
