Saving Money on Foreign Exchange Costs While Traveling

by Miranda Marquit · 6 comments

When I was an exchange student in Europe more than a decade ago, I used Traveler’s Checks. Anytime I needed to replenish my supply of Austrian shillings (this was before the currency union in Europe), I needed to find someone to change money. And, of course, I had to pay a commission. The commission paid at the airport or train station, I found, was higher than that paid at a bank in town. Now, of course, few people use Traveler’s Checks, as credit cards and debit cards are much easier to use.

Using Credit or Debit for Foreign Purchases

If you have plastic branded with a major credit company logo, you can use it at a number of places. You can even use your card at an ATM to get cash in a local currency if needed. Doing so can actually save you money. This is because the interbank exchange rate is usually better than the rate used by the currency exchange services you see set up. Bringing your own cash or Traveler’s Checks and having them exchanged at a special service provider is likely to cost you.

However, while your currency exchange fee will be lower, you do need to watch out for other fees. You can check out for information about the bank fees, and network fees, that might be charged on top of the exchange fee when you use a credit card or debit card. In some cases, though, these fees still total less than what you would pay if you went to a service and exchanged cash for cash.

Another way to minimize the cost is to use the right credit cards. My Capital One card, for example, doesn’t charge a foreign transaction fee when I use it on overseas purchases. My MasterCard debit card does, though. So if I want to save money traveling abroad, I should use my Capital One card, and pay it off when I get back. The HSBC World MasterCard also doesn’t charge foreign transaction fees. Before you leave the country, it’s a good idea to double check the fees to find out what will be charged so that you are prepared.

Protecting Your Money When Traveling

One of the reasons it’s a good idea to use your credit card when traveling abroad is for the protection. When cash is gone, it’s gone. However, you have options if your credit card is lost or stolen. You even have options if a Traveler’s Check is lost or stolen, though losing a debit card could result in some liability related to your bank account, and it can be difficult to have the money put back into your account after it is gone.

Make sure that you keep your credit card account number, and the customer service number, somewhere safe and separate from the actual card. That way, if the card is lost or stolen, you can immediately take care of the problem. Some people write down the information and leave it with a trusted friend or relative at home. That way, it isn’t at risk while you are traveling, and you can call for the information if you need to.

Limit the number of cards you to take with you; some recommend that you bring no more than two. And, while you will need cash for some purchases, be careful about how much you carry. Don’t carry more than you can afford to lose.

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  • Arminius Aurelius says:

    I have a lot of family from Germany and Austria . Before they come to visit me here in the U.S. , I tell them that if they want to exchange Euros for U.S. dollars , we will go on the internet and find out what the wholesale rate is and I will exchange their Euros for U.S. dollars at the wholesale rate / no mark up like the banks charge . That way they and I save on the commissions that the Banks or Credit Cards would charge . It is a win / win situation . Just came back from Europe using the Euros that I bought from European family members.

  • Vazir Mukhtar says:

    When I told the manager of the branch where we bank that we were going abroad and planned to use ATMs there, she said we should have no problems as our bank’s debit cards are supposed to work in all ATMs. As the previous poster observed, she also raised the daily limit available through an ATM.

    I don’t know what the organization is, but our US bank and the European bank where we withdrew money evidently belong to it. The ATMs charged us about $1.00 and our American bank imposed no charges!

  • Chanell says:

    Great info. One thing I would add though; last year, I didn’t find out until I was already in Europe that I needed to notify my financial institution that I was traveling so they could remove a security hold from my debit card. Fortunately I was able to get online assistance to do so. I only figured out about the hold after my card was rejected and the person I was traveling with asked if I had notified the bank.

  • Jon - Free Money Wisdom says:

    Smart tips, Miranda. Very insightful considering I want to travel abroad in the future. Identity theft is a very real problem and so keeping a limit on the amount of cards you carry is extremely wise. Great post.

  • Justin says:

    When my wife and I went to Italy we were advised to change our money at the airport before arriving. The fees charged at the airport we’re much less than what we saw advertised at the local currency changing outlets around Florence where the purveyors had customers with fewer options.

    We only used our debit card once for day to day purchases out of fear of exorbitant fees, I wish we would have verified that a little more up front, it probably would have saved us even more.

    • Miranda says:

      It probably depends on where you are. And, of course, things have changed since I last went to Europe. 🙂

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