When traveling abroad, you can avoid excessive fees and poor exchange rates by knowing where to exchange your money and the best methods for payment. Numerous travelers find out after the fact when they check their bank account or credit card statement and find unnecessary charges that could have been reduced or eliminated.
The least expensive way to get cash when traveling broad is through an ATM, even the bank teller could end up costing you more. To reduce the number of ATM fees, withdraw larger amounts at one time rather than several smaller amounts.
Be sure to notify your credit card companies and bank that you will be traveling overseas. This will keep them from freezing your account. Sudden international activity can trigger the issuer’s fraud alert system, and you will be unable to use your card until you get the situation rectified.
How to Reduce Your Costs:
- Check with your bank to see if it is part of a global ATM network. This will allow you to access your money in foreign countries for free or at a lower cost.
- You will generally receive a better exchange rate on foreign currency abroad rather than getting a large amount at a bank in the U.S.
- Use your debit card at the ATM— not your credit card. With a credit card, you will pay higher fees, a foreign transaction fee of 1% to 3% (unless your credit card does charge this fee), and a higher interest rate, since it is considered a “cash advance”.
- Know what the local currency exchange rate is to keep from getting ripped off. Some merchants may take advantage of this by overcharging or not giving the correct amount of change. Check out XE for a currency converter and daily exchange rates.
- Many banks will charge a currency conversion fee for using an ATM in a foreign country.
- Some debit card issuers charge a flat withdrawal fee from $1.50 to $6.00 per transaction, while others may charge a flat fee plus a percentage charge of 1% to 3% for each transaction.
- The ATMs abroad will generally charge a non-member fee of about $2.00 or more.
Avoid Paying Higher Fees and Getting a Poor Exchange Rate:
- Commercial ATMs that are not run by banks (like Travelex Money Machines) charge higher fees — oftentimes double that of banks.
- Airport Exchange Kiosks oftentimes charge excessive fees and offer a poor exchange rate.
- “No Fee” Bureau De Change are typically the most expensive places to exchange money. They have a bad exchange rate and charge you an additional percentage to change your money into foreign currency.
- Avoid Dynamic Currency Conversion. If you are asked if you want to charge or pay cash for your purchases in U.S. dollars, say no. There are hidden fees and a poor exchange rate. You could end up paying double in fees.
Suggested Payment Methods:
- Bring 2 major credit cards (MasterCard and Visa are the best options) and 2 debit cards (in case one gets damaged) and keep the rest safely at home. Check the expiration date to make sure they will not expire before the end of the trip, and get the non-800 phone numbers of the credit card companies and bank.
- Not all hotels, merchants, or restaurants abroad will accept credit cards, so be prepared to pay cash or go elsewhere.
- Debit/ATM cards should be made for cash withdrawals, but not for purchases abroad. If there is an error in a charge or if you return an item, it could take up to a week or more for your account to be credited.
Make sure you can Access your Money at Foreign ATMs:
- Check your card’s PIN (personal identification number)— if it is over 4 digits or starts with a zero, it will get rejected at ATMs abroad. Contact your bank to have it changed to 4 digits before you travel. Keypads abroad are all in numbers, so if your PIN includes letters, either know the corresponding number or get a new PIN.
- You may be able to withdraw funds from your checking account only. You may not be able to access your savings account from ATMs abroad.
- Ask your bank how much you can withdraw in a 24 hour period. Some ATMs have limits as well and not all will issue a receipt or the exchange rate. If you are given only high-denomination bills (they can be harder to use), go to a bank and exchange them for smaller bills.
- Many ATMs are in bank lobbies. In Europe, if the bank is closed, look for a credit card slot next to the door. Insert or swipe your credit or debit card and the door should open.
- For safety reasons, use ATMs during daylight hours and inside lobbies rather than out on the street. Criminals watch for unsuspecting tourists withdrawing money at ATMs.
Keep an eye on your Credit Card Charges and Bank Account:
- Check your bank account balance and credit card charges online periodically (on a secured internet connection – not on Wi-Fi). Keep a watch out for fraudulent charges and find out what you are being charged for currency exchanges or ATM fees.
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