Remember the days of carrying bulky travelers’ checks in your wallet to handle your foreign currency transactions? I do. When I first began working internationally sixteen years ago, we were all handed these books worth quite a sum of money and needed to cash them in when we arrived at our destination. The other alternative we had was to take a cash advance on our credit card and use that money to cover the cost of necessities on the road that couldn’t go on our credit card. Looking back, I’d say that we have come a long way since then.
There are so many convenient ways to pay for things now. Credit cards are widely accepted, and the easy availability of ATM cash machines gives you access to cash quickly. However, with all of this ease comes a cost in the form of fees and commissions. Let’s take a look at some of these costs and my advice on where to get the best deals:
1. Banks Give the Best Rates
It is a general rule of thumb that you will get the best conversion rate (or lowest commission charged) with a bank at your destination, rather than at the airport money exchange kiosks. Airports and hotels are notorious for giving the worst rates. Although, I must admit, I never exchange money at banks during my trips. The most important thing to be clear on when you arrive is whether the local taxis require cash only to get you to your hotel.
These trips can cost well over $100 depending on how far you need to go. That is always my immediate assessment for how much cash I need before stepping out of the airport. Ask your hotel concierge this question before you arrive and only get enough cash to cover this cost. Bring enough of your local currency with you that you could exchange money to cover the ground transportation cost.
2. Charge It!
It’s easy to forget that using your credit card to make purchases when traveling internationally could come with a cost too. After your trip, you may see on your statement a separate line item called a “foreign transaction fee.” Each credit card company can decide what rate to charge you, if any.
Those that do charge a fee generally range between 3 percent and 5 percent of your purchase. If you travel quite a bit you may want to very carefully search for a credit card plan that does not have this kind of charge. At least find out before you leave what your current credit card fee amounts are. If you plan to do luxury shopping, please keep this in mind as these fees can really add up. Check out the website CARDHUB.COM to explore options by typing in “no foreign transaction fee” in the search bar.
3. The Cash Machine
It is true that in most countries and cities there are cash machines on every corner. Sounds great, right? I suggest you watch in this area, and keep a few things in mind. First, not all machines accept all cards. You need to make sure that your bankcard is connected to the worldwide Cirrus or PLUS networks. If it isn’t, you will have trouble accessing your money. You may want to get a debit card instead. As far as fees and commissions go, these can add up substantially.
It is pretty common to expect that your bank will charge a flat fee (about $3–$5) on each withdrawal not in their network, plus a foreign transaction fee of another 2–3 percent on top of that. Then, the cash machine operator may charge another fee on top of your bank. It can be another few dollars. The cost of getting money out can be fairly substantial. I usually opt to use my credit/debit cards versus using cash. But, if you must get money out, I advise you to stick with official bank cash machines, rather than the lone standing cash machine in a small side street to avoid scams.
As always, I wish you all the happiest of travels!