I’m leaving on January 1 for open-ended travels, and I thought it might be useful to unpack how I am planning to use credit cards, debit cards and cash to minimize fees and currency-exchange costs.
First, though, I should point out that I’m from the US and using US-based cards, so all the research I’ve done is from that perspective. And my first several destinations will definitely be in Europe, so I assume I’ll be able to use a credit card at most of the places I’ll go.
On past trips, I mostly tried to spend cash everywhere. I have a Chase checking account, and at the beginning of each week I was abroad, I would take out cash for 7 days from a local ATM, for which Chase would charge a flat $5 plus a fee for converting the cash. Most months, this worked out to about $25 in charges, and I just sort of wrote that off as a necessary expense.
This time, I want to be smarter about both avoiding fees and security — I was tempting fate by using a debit card exclusively for all these years. Here is my plan: The Cards I’m Bringing On My Trip
First, I’m following the advice of Marcello Arrambide at Wandering Trader
and setting up two accounts with my bank, still Chase. One has a debit card attached to it, and the other doesn’t. That way, I can easily control the amount of cash my debit card has access to.
Second, I’ll bring a Chase Sapphire Preferred credit card, which is what I’ll use for all of my non-cash payments. That card has no fees for foreign transactions, and that’s the main reason I got it.
Here are a few other American credit cards with no foreign transaction fees, courtesy of Nomadic Matt
- Capital One VentureOne Card
- Chase Ink (business card)
- United Mileage Plus
- Some Discover cards
- Barclays Arrivals Plus World Elite Mastercard
There are many more such cards, and it appears most people who qualify for a credit card in the US can find a decent card to use abroad. Tips for Using Credit Cards
- Don’t let a merchant charge you in any currency other than the local one. This dynamic currency conversion comes with a fee, which can be as much as 5%. So, you’re basically paying 105% for whatever you buy when you do this.
- Rick Steves even points out that some merchants will hand you a receipt with totals in both the local currency and one in your home currency. In those cases, his advice is:
Circle or check the amount in the local currency before you sign. If your receipt shows the total in dollars only, ask that it be rung up again in the local currency.
- As /protox88 pointed out in a Money Matters thread a while back, don’t use your credit card to take out cash. That’s what your debit card is for.
Ideally, you would be able to put most of your spending on your no-transaction-fee credit card and pay that off each month. That would be the cheapest way to spend money abroad — but far too many places are cash-only for that to work.
So, you’ll likely have to eat a charge for taking out money. The trick is to strike a balance between going to the ATM only sporadically and not carrying around fat wads of cash. Getting Cash /travel
pointed me toward the Charles Schwab High Yield Investor Checking Account as the best way to save on ATM fees when traveling. The Schwab debit card charges no currency conversion fees when withdrawing cash from an overseas ATM, and it will give you a rebate for any foreign ATM transaction fees.
After the Schwab card, the cheapest options for using an ATM are if your card is from a bank that’s a part of the Global ATM Alliance
, and you’re withdrawing from an ATM that’s part of that alliance. Keeping ATM withdraws within this network mostly eliminates foreign ATM charges, though there are some exceptions.
has some helpful advice
: Alliance members might still charge a forex spread (the cost of exchanging currencies) of 2.5% on your withdrawal.
When withdrawing cash, it’s best to use an ATM inside of a bank rather than one on the street. I’ve had my debit card data stolen a couple of times by opting for convenient ATMs at a metro station (usually during a night out). Exchanging Currencies
Currencies and forex used to make my eyes glaze over. After a few years of dealing with this stuff, I’ve learned a few things:
- Don’t exchange money at an airport currency exchange kiosk. Their spreads — the difference between what they’ll buy and sell a foreign currency for — are terrible. Use an ATM at the airport before exchanging money.
- Keep an eye on spreads as you travel. Usually, a currency exchange will set its buy price 2.5% lower than the official exchange rate and its sell price 2.5% higher. So, if the euro is trading at US$1.10, you’re getting a good deal if a currency exchange will buy your dollars at US$1.09 per euro or sell you euros for US$1.11. I spent a lot of time in the Baltic states, and some of the sketchiest-looking currency exchange booths had the best exchange rates you’d find in Riga or Vilnius.
- Also, keep an eye on exchange rates in general. If your money is denominated in dollars right now, you’ve got more buying power in most countries than you would have 15 months ago.
A couple of other notes left over from memory and research:
- CurrencyFair’s blog recommends using prepaid cards that support multiple currencies. These cards can support multiple currencies, so you don’t lose out on exchange rates, and they don’t have ATM withdrawal fees.
- From Wandering Trader again: Visa has its own currency conversion rate that you can check here. If you have a Visa debit card and you don’t need cash immediately, take a look at the current rate. You might get a better deal by taking cash out in a day or two.
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