Help a Reader: Traveling Abroad

Here's an email I recently received from a reader:

I'm traveling abroad next month and I'm curious how people handle cash when traveling.  My Chase Sapphire Preferred card excludes me from foreign transaction fees on credit purchases, but I'm not sure what to expect on cash.  Travelers checks seem antiquated. What's the best (and cheapest) way to get foreign currency without being chewed up by fees?

• Should I get cash from my bank in advance?
• Should I just use my ATM card when I land on foreign soil?
• Something else?
• What do I do when I want to change my unused money back?

What's your advice for him?

Comments

[mb]

Use an ATM there for cash, otherwise use a credit card whenever possible. Travelers checks are not worth the hassle, and depending where you go (Africa for instance) actually cost a lot more. Europe doesn't charge ATM fees, so long as your bank doesn't charge anything it is good way to go. A lot depends on the country or countries you visit.

[Luis]

I echo the previous poster on it depends where you go so you have to do a little research before going. If you have a "CitiGold" card they charge no transaction fees at Citi affiliated banks/ATMs around the world. Use the ATM locator on their website to find the nearest ATM near your stay. Also, if you want to have foreign currency with you before you travel you can call Citi's World Wallet toll free number and have cash shipped to your home next day at no extra charge.

[Jeremy]

I agree with the poster above that you'll definitely want to use an ATM there. In Western Europe, you'll still find that many places don't accept credit cards. Traveler's checks are expensive and more difficult to deal with.

One thing to be aware of, though - don't allow foreign merchants to charge you in US dollars. They'll charge you a terrible exchange rate compared to what the credit card companies will charge.

If you don't already have one, I recommend opening a checking account with an online bank like Schwab. After 2 other online banks over the last 10 years, I definitely like Schwab the best. They rebate up to $9 in ATM fees a month, which is only 3 transactions these days. I don't know Schwab's policy, but other online banks I've had refunded ATM fees by dividing ATM transaction amounts by $5 and refunding the remainder. I've actually MADE money on foreign ATM fees before since foreign ATMs rarely charge fees themselves, but the bank refunds the odd amount that the exchange rate causes.

[Brent]

Get some cash in the currency you are traveling to in advance from your local bank 'just in case' but then once you get there, use the ATM for anything more you will need cash for.

[Luis]

If where you're going accepts credit cards, the Capital One MTV card works nicely by rewarding you 5% cash back on entertainment and 2% on dining. When you get back from vacation you probably should double check the points allocation behind Capital One as the transactions in foreign language can cause confusion. Note where and when you went for entertainment. Capital One customer service has been excellent to me and do not second guess my corrections.

I try to use only my credit cards when possible and then cash as the alternative that way I have as little on my person as possible.

[Lynn]

Travelers checks are not worth the trouble...

I recommend getting cash USD before the trip. Change $200-300 in the US or at your destination airport...just enough to cover transportation and food for 1 day or so. Then change USD as need in country, as the rates are much more favorable from local exchange centers. You can use the ATM for cash, but you get better rates locally. I recommend doing whatever is most convenient. If you use the ATM opt for larger, less frequent withdrawals to save on fees. ***IMPORTANT: (1) Before you travel contact your bank or credit union and find out what your daily ATM withdrawal limit is - consider increasing if you think you will prefer to have cash, but want to make fewer withdrawals. (2) Also let your banks/credit unions know that you are traveling

I also recommend bringing 1 Visa debit or credit card, and 1 Master Card for non-cash purchases. I've found that regions vary widely, some places favor Master Card and you'll have a hassle trying to find a business or ATM to accept Visa.

[Joanna]

I always found the best exchange rates at the post office in the country I was visiting. Please remember that exchange rates change once a day and that there's a buying rate and a selling rate. And there's always a fee for exchanging money!

[Jess]

My three experiences:
Mexico, touristy area: got some money changed before the trip, but as I was at an all-inclusive resort I didn't really need a whole lot of cash, except for souvenirs. The dollar is pretty widely accepted, so I was able to get by with a combination of dollars and pesos for tips and such.
Thailand, organized tour: most of my meals were covered, which was great, but I ended up going o the ATM a few times. The challenge there was having to take out a thousand baht at a time (about $300 US at the time), and having to make change!
Australia, organized tour: again, a portion of my meals were covered, but it was definitely helpful to have local currency on hand for when we landed on our first day, and I went to the ATM a few times for fun money.

All in all, I recommend get a little cash beforehand (not at the airport!), tell your bank and credit card company/ies you're traveling (and have someone at home ready with some important info in case they call because your card's being used abroad!), and get rid of your coin currency BEFORE you get home. When I got back from Australia I had a ton of coins that the bank wouldn't convert back to USD - paper money only, likely because it's cheaper to ship paper than metal!

[Jess]

Oh, and as a part-time mall retail worker - traveler's checks are a pain in the butt. And depending on where you're going they may not even be accepted.

[Matt]

Thanks for all of the input. I suppose this would be a tough thing to know, but anyone know if the rate received at the ATM differs greatly from bank to bank?

I'm assuming this isn't really an issue. I intent to pay by credit card for absolutely everything I can. I do that anyway, but cash is handy to have for small things and cab rides and such.

Would I suspect a better exchange rate at the ATM when I use my Wells Fargo card vs. my local credit union or is that a non-issue?

[First Step]

My daughter went to Canada, England, France and Switzerland over the summer. We gave her a Capital One card to use because there are no foreign transaction fees for that card. The exchange rate varied from day to day, depending on when the transactions posted to the credit card. She didn't use her debit card from our credit union because they charge foreign transaction fees, so I can't compare rates between institutions.

The exchange rate through our credit union was better than Wells Fargo to get currency (British Pounds and Euros) ahead of time, but a friend handled the details, so I don't know what the difference was. Even though Wells Fargo processed the currency trade for the credit union, it was less expensive to go through the CU than Wells.

Let your card issuers know when & where you'll be traveling, and try to get a card with "Chip" technology. Some of the ATMs and automated sales terminals (like in quick serve restaurants) in Europe only work with cards that have an embedded chip.

[Claire]

Use the ATM...muuuch easier. I believe typically the rate is the rate of the bank who owns the ATM, plus any applicable fees for not using your own bank's ATM. You could ask each bank what the rate is before you go. It'll change, but you'll have an idea.

We just had a little trouble in England with our cards though - all the cards there have a chip on the front and are read by a "chip and pin" machine. American cards don't have that. We were fine everywhere except the car rental place - they can still swipe cards the way we do, but they didn't really like to do it. My parents questioned their American bank when we got back, and the bank is going to send them a card with a chip in it so that they are all set for the next trip.

I don't know if anywhere else in the world used chip & pin.

[billyjobob]

I just go to an ATM every few days and get what I need. Be carfull not to take out too much. Otherwise you'll be buying expensive junk from the airport when your ready to leave, just to use it up.

[Hal]

Echoing what lots of people have said already, skip the travelers checks and use a credit card when you can. Have a little bit of cash (to exchange, not ALREADY exchanged) just in case of an emergency, and withdraw what you need as you need it (no more), from a bank's ATM.

However, the devil is in the details.

Pay attention to your bank's or credit card's terms on foreign transactions, including cash withdrawals. Some banks will charge you up to and exceeding 3% just to withdraw your own money. I avoid this by using my credit union to withdraw cash (1% exchange fee) and using a Capitol One credit card for credit transactions (0%... at least it was the last time I traveled). I do keep two other cards in reserve, and have a PIN to make a cash withdrawal, just in case.

There was a question about which rate the banks will give you. Again, the devil is in the details. I've found that it's usually the interbank rate (i.e., not marked up), plus the fees I described above. So, when I withdrew cash, it was the interbank rate +1% in the bank's favor; when I used my Capitol One card (I promise, I don't work for them), it was the interbank rate without any mark up. Check your bank's terms to figure out what the charge will be.

Also, if you have big purchases that you have to pay for with cash, be sure to pay attentiont to any withdrawal limits. In my case, I always used little B&Bs or apartments were the landlord didn't accept credit, so if I had to pay 500 Euro up front, I had to withdraw the cash over 2 days so I didn't hit my cash withdrawal limit.

Finally, CALL YOUR BANK(S) AT LEAST A WEEK OR TWO BEFORE YOU GO ON YOUR TRIP! You don't want to get overseas only to have your cards blocked because your bank thinks your card has been stolen! It's an easy phone call to make, and many banks now have automated this process so you don't even have to talk to a person when you call.

[Rosemary Jayne]

As someone who lives in Europe I would like to correct the statement from one poster that there are no ATM fees here - in fact they exist in every country, but you will always be notified before you are charged. If you wish to withdraw cash do so at the post office as they rarely do.

Also please no travellers cheques - I worked at Disneyland Paris over the summer and out of all the methods of paying they were the worst as I always had to call a manager to authorise the transaction, demand to see the passport of the customer (no other ID was accepted at the time), etc. It's a lot of hassle.

And yes the chip thing is true, we prefer them - when we take cards. In Germany they tend to prefer cash - especially in restaurants and smaller guesthouses so make sure you always have enough on you to pay your bill.

The alternative is to get a cash card before you go - you top it up with X amount of whatever currency you're going to be using usually and then transactions are fee free, and you will only be charged a small amount for ATM fees (from the card provider). The good side is your exchange rate is already dealt with before you leave so you're not worrying about the changing rates as you go.

[dcs]

Rick Steves' web site (http://www.ricksteves.com/plan/tips/tips_menu.htm) has a pretty good section about money, especially (but I assume not exclusively) if you are going to Europe. At the link above, there's a "Money Matters" section at the lower left corner.

Note that I'm not endorsing his travel service (which I have never used, although I do like his TV show) but there's a lot of good info there even if you're not buying anything.

[dcs]

Rick Steves' web site (http://www.ricksteves.com/plan/tips/tips_menu.htm) has a pretty good section about money, especially (but I assume not exclusively) if you are going to Europe. At the link above, there's a "Money Matters" section at the lower left corner.

Note that I'm not endorsing his travel service (which I have never used, although I do like his TV show) but there's a lot of good info there even if you're not buying anything.

[texashaze]

I travel internationally frequently for my job. Typically I follow what most of the others have already posted - get cash at a local ATM (only what you need, don't get too much), but I try to use my credit card as much as possible.

MAKE SURE YOU CHECK THE FOREIGN TRANSFER FEES on you credit cards. Some of them really stick it to you. This is very important. Find out which has the best and use it. You may even look at other cards and shop for the best rate. The fees can really add up if you aren't careful -- especially if you have a large number of transactions or large amount of money in the transaction. The fees are usually % based on the transaction so look out.

[fka CPA Abroad]

Having lived in Europe for 2 years (2008-2010) I would suggest just getting cash from an ATM. Even if you have to pay an ATM fee it will be cheaper than getting it at a currency exchange place. Schwab and USAA (I think ING as well) refund ATM fees in the US, but I am not sure they do so in Europe. If you have an account at these places, or the time to set one up, I would suggest calling them to find out.

[SteveD]

I always use my ATM card for cash. I've used both Bank of America and my credit union's ATMs on the same trip to Asia. B of A charged $5 more per transaction, so it's quite significant.

[Jane]

I travel frequently internationally for business. I carry a few hundred in US cash to exchange in case of emergency, such as the ATM not working and I need to get money for a cab from the A/P. Otherwise I use the ATM/Credit Card. There are a some places where I take more "emergency cash" such as Africa because I've experienced in the past where I've had difficulty accessing an ATM that worked and I was comfortable using.

[Justin]

Open a Schwab Brokerage Account w/ an Investor Checking attached to it. You do not have to use the Brokerage Account, and the checking account pays interest and refunds ALL ATM fees domestic or international. Use the debit card at ATM's with confidence. Keep receipts, and if Schwab doesn't automatically refund, you show them the receipt ant they will refund the fee. I went to Italy for 2 weeks and had ZERO fees using the Schwab debit card and a Capital One credit card. Also, the ATM will give you the most up-to-date exchange rate without adding a premium.