Spending Money When Traveling Overseas – What You Need To Know

You have planned your dream international vacation. You researched flights and hotels and found the best deals. But your planning is not complete yet. But there are a few more things you should consider.

  • How are you going to pay for expenses once you land at your destination?
  • Where will you change money?
  • Do you have a credit card that doesn’t charge foreign transaction fees?

Don’t exchange money at the airport

Changing money at the airport is convenient. But exchange rates offered at the airport are terrible and the customer service is not great. They also tack on high service fees. The same goes for train stations and ports. Always carry US dollars or traveler’s checks with you. If you need to change money in another country, use a local bank that does money exchange.

Understand foreign exchange rates for the countries you are traveling to

Foreign exchange rates vary a lot. The rate your get at the airport may be very different from what you can get at a bank.  Get familiar with the exchange rates in the countries you are traveling to. This will help you understand whether you are getting a good deal when you exchange money.

Use credit cards that don’t have a foreign transaction fee

Credit cards are convenient. But not all credit cards are the same. When traveling internationally, always use a card that doesn’t charge a foreign transaction fee. You could easily save 3% or more by using the right card. If you don’t have a credit card that doesn’t charge a foreign transaction fee, apply for one and get it in time for your travel.

Always pay in local currency

When you are traveling overseas, you will have the option to pay in local currency or in US dollars. You will see this option when you swipe your card. Always choose to pay in local currency.  If you pay with US dollars, you will pay an extra 3-5% in conversion fees. Credit card companies use a third-party service called Dynamic Currency Conversion to convert the transaction to your home currency.

Pay with a credit card

Whenever possible, pay with a credit card. Credit cards will give you the best rate (as close to the interbank rate as possible). This will save money compared to paying with cash. There is also less risk with a credit card. In case you lose your credit card, you can call the bank to cancel the card immediately. You also get fraud protection by using a credit card.

Understand the fees when using ATM

When you use an ATM overseas, use a debit card that doesn’t charge foreign transaction fees. There may be two other charges – one charged by your bank and the other charged by the bank that owns the ATM. If you use the right card, you may be able to save money on one or both fees. Many banks reimburse ATM fees. Check if your bank is one of them.

Call the credit card company and inform them of your international travel

Many credit card companies will tell you that they have smart fraud detection systems and that it is no longer necessary to call them before you leave the US. I take a conservative approach and call them every time I travel overseas. There is nothing more frustrating than getting to another country and finding out that you can’t use your credit card.


In the US, we tip more because our servers and bartenders in many cases don’t even make minimum wage. That’s not the case in other countries. In some countries, service fees are automatically added to your bill. Check your bill before you tip.

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