- Do not use your debit card for any payments other than ATM withdrawals.
- Cash and credit cards are each useful for different transactions.
- You can get foreign currency from banks, currency exchange offices and ATMs.
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Finally, you’re going on a trip abroad.
After investing so much time and energy searching for the best deals on flights, cruises, accommodations, and travel experiences, it can be a shame to end up spending extra money at the last minute. But that’s what can happen if you don’t use your cash and credit cards wisely.
“The one thing I definitely don’t recommend doing abroad is paying with your debit card unless you’re withdrawing cash from an ATM,” says Matt Granite, a consumer savings expert known as “The Deal Guy” on YouTube.
Here’s why and other information travelers should know before visiting other countries.
learn more: Best Credit Cards for 2023
Can I use my debit card overseas?
Yes, but Granite strongly discourages using it for any payments other than ATM withdrawals.
“You’ve just given an unfamiliar device access to your bank account using your PIN code, and you have no idea what’s going to happen next,” he warned.
Is it better to travel with cash or with a credit card?
both.
“You always want to carry cash with you in case of emergencies,” Granite says.
Cash is fine for tips and small purchases, but for larger transactions, credit cards are recommended, unless there are foreign transaction fees.
“When you’re in a remote location, not knowing where you are or who you’re dealing with, you’re more likely to get scammed or that the operator won’t give you what you paid for. The chances of getting ripped off are much higher than if you were on your own territory,” Granite says. “So always use a credit card. If something goes wrong, you’re not responsible for the purchase. There are compensations, there are fraud investigations, suspicious transactions are put on hold, and the whole world is working for you.”
How can I avoid foreign currency transaction fees?
Call your credit card company or research their policies online before you leave on your trip and avoid using cards that charge fees.
How much cash should I bring when traveling abroad?
“I think anyone traveling in a country for more than three days should bring at least $300 worth of cash,” Granite said.
He added that he recommends the equivalent of $500 for families, but could go for less in destinations where the dollar is strong.
“You always have to ask yourself: ‘What if my credit card gets stolen and I have to go from the airport to a hotel to pay for a night’s stay?'” he said. “Credit card companies need to be able to expedite delivery of (new) credit cards via FedEx or DHL so that you can survive 24 to 48 hours overseas.”
Where can I use US dollars?
Several foreign countries use the US Dollar as their official or legal tender currency. These countries include:
◾ Bonaire, St. Eustatius, Saba
◾ British Virgin Islands
◾ Ecuador
◾ El Salvador
◾ Marshall Islands
◾ Micronesia
◾ Panama
◾ Palau
◾ Timor-Leste
◾ Turks and Caicos Islands
The US dollar is also used as a currency in US territories such as Puerto Rico and Guam, and some businesses elsewhere freely accept it.
How to get foreign currency
There are several ways to obtain foreign currency before and during your trip. You can order foreign currency from a bank for a fee, exchange cash at a bureau de change but at unfavorable exchange rates, or withdraw cash from an ATM at your destination.
“Another trick I use is that if you have a credit card with no foreign transaction fees while traveling, you can often exchange money at a very good exchange rate up to your limit at both chain and boutique hotels,” Granite said, explaining that you can hand over some local currency at the front desk and have that amount added to your hotel bill like a night’s stay. “Not all hotels will be able to do that, but many, especially in Europe, will be happy to do so.”
Should I obtain foreign currency before traveling?
That’s not necessary, but if you do want to, “banks can definitely provide a better experience if the U.S. dollar is stronger before you leave,” Granite said.
“For example, if you’re traveling to Canada, and the US dollar is strong, it’s 100% to your advantage to get some Canadian dollars from a US bank before you travel. But if you have a currency like the British pound, it’s better to do everything when you get to London rather than in advance,” he added.
Where is the best place to exchange currency?
Many travelers prefer to withdraw cash from ATMs in their destination to get a better exchange rate, but sometimes you may have to opt for a pricey money exchange office instead.
“These ATMs are generally in very well-lit areas. They’re very safe. If you’re traveling somewhere where there are security concerns, they’re often in airports or city centers,” Granite said, recalling a past trip. “If I went to an ATM in a place where I shouldn’t be walking at certain times of the day, I could get a pretty good rate. I’m willing to lose $15 on every $100 withdrawal just to be safe.”
If you use a currency exchange, consider how much you want to withdraw.
“Some people think they can just take a little bit of money and find an ATM and be okay,” he says, “but if you withdraw more from an ATM, you generally get a better rate. Also, there are generally maintenance fees and charges added to each transaction, so whether you withdraw $5 or $1,000, you’ll pay $15.”
Can I withdraw cash from ATMs overseas?
Yes, but be aware of the fees.
Just like at home, if you withdraw cash outside of a network, you may be charged fees by both the ATM and your bank.
Granite said you can avoid or limit these fees by using ATMs within a bank’s Global ATM Alliance. Before you leave home, you can research bank partners online. Apps like ATM Fee Saver can help you find fee-free ATMs while traveling.
If your bank account normally limits the number of withdrawals you can make each month before fees start to apply, be aware that overseas withdrawals will count towards that limit, he warned.
He also reminded travelers that ATMs are required by law to clearly display fees on their screens.
“If you see an ATM you don’t like, you can say no, take your card out, walk a block and go to the next one,” he said. “A lot of people feel like once they put their card in the machine, they have to complete the purchase, which is a weird psychological thing, but it’s not really the case.”
Can I withdraw cash using a credit card?
Yes, but it should be avoided.
“Whenever you go to an ATM, use your debit card; credit card fees are horribly high,” Granite says. “Using a credit card and an ATM together is not a good experience for anyone, and there’s no reason to do it unless you have zero balance in your account, at which point you have other issues.”
It also warned that if your debit card is affiliated with a major credit card company such as Visa or Mastercard, withdrawals should be made as debit rather than credit.
Do I need to notify my credit card company when I travel internationally?
necessarily.
“Most credit card companies these days have implemented some very sophisticated AI within the last three to five years, so they already know that you’ve booked a trip,” Granite says. “As you travel, they know that you’ve booked flights, tours, or viewed apps, or any other travel-related information, so they know where you’re going.”
You don’t need to tip in Japan.Here’s something else travelers should know.
Should I pay in foreign currency or in US dollars?
“Always use your credit card in the local currency,” Granite says. “If you put your credit card in the machine to pay for something and it asks, ‘Would you like to exchange money?’, don’t exchange money.”
How to dispose of excess foreign currency
The easiest way to get rid of excess foreign currency is to spend it.
“Most people don’t want to exchange cash again,” Granite says, “or pay the remaining hotel bill in cash if they have too much cash from a previous trip.”
If you plan to return to your destination, you may choose to hold onto your currency.
“You put the cash in an envelope and put it in your safe and then you look back three years later and you think about how much it cost you to get it and you never forget you’ve got pounds or euros in the safe,” Mr Granite said.
