Cash or Credit? You Need Both for Overseas Travel

It’s officially summer, and a lot of people I know are planning vacations that range from a budget-friendly week in their own town to a month in Europe. As a veteran of several overseas adventures, I know first-hand about the additional challenges that travelers encounter in foreign countries. One of the biggest concerns about overseas travel is money. By following these tips when preparing for your trip abroad, you can face a little less stress and save a lot of money when you’re on the road.

Take Credit. How are you going to pay for your hotel, meals, souvenirs and other expenses if the country doesn’t accept American dollars? Years ago, travelers’ checks were the only option, but many establishments no longer accept them, and there are exorbitant fees for exchanging them, so they really aren’t a viable option anymore. I know of some travelers who rely solely on a preloaded travel card that works like a credit card, but it’s not going to be of any use when you’re trying to buy a one-of-a-kind piece of art from a street vendor. In addition, a poor exchange rate and additional fees make this an expensive way to pay.  A credit card is still a necessity when traveling because it’s never a good idea to carry a large amount of cash. Most credit cards smack a foreign currency conversion fee onto each purchase, usually about three percent of the amount charged. Some can add an additional flat fee for each transaction. To avoid these costs, sign up for a card that doesn’t charge foreign currency conversion fees, like CapitalOne and certain Chase cards. Note that CapitalOne doesn’t charge an annual fee either.

Money talks. While credit cards come in handy, cash is sometimes the only option. Since many countries have an advanced smart chip feature, merchants may not know how to use the American cards with the magnetic strip, and some train stations do not accept these cards. It’s possible to get an American card with smart chip technology – Chase offers a few – but the annual fee is at least $95.

While many larger banks and AAA offer foreign currency, avoid the urge to buy it in the United States, even a small amount. Likewise, don’t buy it in change offices when you arrive at your destination. These places offer a terrible exchange rate and usually add additional fees. You most economical way to get cash is at an ATM. As long as you have a four-digit personal identification number that is all numbers, you should never have a problem. Note that the card usually has to be hooked up to your checking account rather than a money market or savings account. If your card is hooked up to more than one type of account, the money will come from your checking account, and you will not have the option to transfer money between accounts at a foreign ATM. You may be charged a fee for taking money from a foreign ATM, usually $5 to $7, so be sure to take as much as you feel comfortable with rather than using the ATM every day if you are trying to avoid fees. Check with your bank to determine your daily ATM limit and fees. Note that Bank of America customers are not subject to fees when using ATMs at its sister banks in foreign countries.

Before you leave, be sure to call your credit card company and your bank to let them know where and when you will be traveling. If you forget to do this, the company will put a freeze on your card the first time you use it in a foreign country. If that happens, you will have to call the company to straighten it out if you hope to use the card again. Save yourself the time and the cost of an expensive phone call and make arrangements before you leave. Be sure to take the international phone numbers to your bank when you travel just in case something happens.

Finally, do I really need to tell you to keep your cards and cash secure when you travel? Pickpockets can be clever, so think twice before you strap on a backpack that contains your wallet or stuffing your cash in your back pocket. You don’t want to treat a thief to a souvenir of your vacation.