How To Avoid Fees When Getting Cash When Traveling Abroad

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
How To Avoid Fees When Getting Cash When Traveling Abroad
ChooseFI has partnered with CardRatings for our coverage of credit card products. ChooseFI and CardRatings may receive a commission from card issuers.
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.  See our disclosures for more info.

ChooseFI Favorite: top rewards card for beginners

Chase Sapphire Preferred Card​

ChooseFI’s top pick for travel rewards! The Chase Sapphire Preferred Card has a 60,000 point sign-up bonus (after spending $4,000 in the first 3 months). The points are ultra-flexible and transfer to 13 airlines and hotels. $95 annual fee.

ChooseFI Favorite: top rewards card for beginners

Chase Sapphire Preferred Card​

ChooseFI’s top pick for travel rewards! The Chase Sapphire Preferred Card has a 60,000 point sign-up bonus (after spending $4,000 in the first 3 months). The points are ultra-flexible and transfer to 13 airlines and hotels. $95 annual fee.

I love using my credit cards to earn miles, points, and cash back. But when you travel internationally, places you visit won’t always accept credit cards. This is why you need to have cash available while traveling. But how do you avoid fees when getting cash on international vacations?

While traveling, the best option is to use your rewards credit card to pay for purchases. This will ensure you get the best exchange rate, offer the most protection in case of a dispute, and earn miles and points towards your next vacation. But cash can get you the best discounts when negotiating, so it pays to have a way for easy access without a lot of fees. So getting cash may be a good way to get discounts at local markets.

If you do use a credit card overseas, watch out for foreign transaction fees. This is an additional fee that some credit cards charge when they convert currencies. Here’s a list of cards that do not charge foreign transaction fees. These are great cards to use while you are out of the country.

Should You Pay In Local Currency?

Do you even need local currency? The real answer is, it depends.

Paying with local currency shows that you are trying to assimilate with local customs. However, sometimes paying with US dollars is better because it is a more powerful currency. This is especially true when dealing with street vendors in regions of the world where their local money is not good outside of their own country.

I prefer to have a mix of local currency and American dollars so you can pay with whatever money works to your advantage the most.

Watch Out For Foreign Currency Conversion Rates

Whether you are paying in cash or with your credit card, watch out for inflated foreign currency conversion rates. When a vendor offers to charge you in US dollars as a “convenience”, it is an easy way for them to make a little extra money on you.

I was recently in Cancun with my wife for a long weekend. When grabbing a drink at the bar while waiting for our ride, the sign showed 18 pesos equals $1 US dollar. Using the Oanda currency app on my phone, I saw that current rates were actually 20 pesos per $1 US dollar. If I had paid in US dollars, my bill would have been inflated by 10%.

The math goes like this: actual rate / stated rate by vendor = price inflation. In other words, a $10 drink would really be $11 if you paid them in US dollars. Sure, $1 may not be much. But imagine how much it would add up to if you paid 10% more on everything you bought over the course of a weeklong vacation?

The bottom line is that it is almost always better to pay in the local currency.

Related: How To Save On Travel With The Right Credit Card

How Do You Get Cash When Traveling Internationally?

When you’re on an international vacation, there are several methods to get local currency.

  • Order foreign currency from your local bank branch
  • Convert currency at the airport
  • Exchange currency at your hotel
  • Receive change in local currency
  • Withdraw money from an ATM

Each of these options has positives and negatives about them. Let’s discuss the pros and cons to figure out which approach is the one you should take.

Order Foreign Currency From Your Local Bank Branch

Many people don’t know this, but most major banks allow you to order foreign currency. Submit your request at least a week in advance because it can take a few days for your local branch to receive the money. Banks often charge for this service, so make sure that you understand the fees that they charge before you give final approval.

One problem with exchanging currency before your vacation is that you don’t know how much you’ll need for your vacation. To me, an even greater concern is that you’ll be walking around with a big wad of cash in your pockets. Border patrol and police are always on the lookout for suspicious activity, and large amounts of cash could spike their interest. Plus, pickpockets and thieves love targeting unsuspecting tourists.

Convert Currency At The Airport

When you arrive at an international airport, there are plenty of signs offering to exchange your currency. This is one of the worst places to convert your US dollars into local money. Remember that airport real estate is expensive and their only product is money. So they need a big spread on the conversion to pay their rent, cover their expenses, and make a profit. Who pays for all of that? The tourists that convert money with them. Don’t let that be you.

Convert Currency At Your Hotel

At some luxury hotels, they will convert small amounts of a guest’s currency as a courtesy. Other hotels charge a small flat fee or mark up the exchange to compensate them for the service. As with any conversion, pay attention to their exchange rates to ensure it is a good deal.

With more hotels cutting back on services as the world goes digital, fewer hotels are offering this benefit at all. I don’t use this approach too often, but it is nice to know it may be available if you’re staying at the right hotel. Speak with the hotel concierge to find out if your hotel offers foreign currency exchange.

Receive Change In Local Currency

While shopping in the local markets or buying something from a street vendor, if you pay with US dollars you will likely receive local currency for your change.

This will generally yield you a horrible conversion rate. But your ability to negotiate with small shops and street vendors will typically offset any unfavorable foreign currency conversion rates. Besides, the amount of money involved here is pretty small. Don’t sweat the small stuff.

Withdraw Money From An ATM

My favorite method of getting local currency while traveling is the ATM. Yes, I understand that most ATMs will be out of network and charge big fees. But banks tend to offer the best foreign currency exchange rates of any available option.

There are a couple of tricks to this method. First, the ATM must be affiliated with a big bank. Don’t use a shady looking ATM. And, second, use a debit card that reimburses you for foreign ATM fees.

Although there are several ways to get foreign currency, using a bank ATM with a no-fee ATM card is the best option.

How To Use An International ATM For Cheap

ATMs are an instant source of cash whether you are home or abroad. But international ATMs can charge fees of 1% to 3% of the cash you’re withdrawing if you don’t use the right ATM card.

When I travel, I always carry my Charles Schwab ATM card. It allows me to pull cash from any ATM around the world without fear of nasty fees. Schwab doesn’t charge fees for using another bank’s ATMs. And they will reimburse you if the ATM charges a fee for withdrawing money.

A few other financial institutions will reimburse for international ATM withdrawals on select account types. This benefit is often reserved for clients who are in higher-tier checking packages or have relationships above a certain level. Checking account packages change on a regular basis, so speak with a banker at these institutions to research which accounts currently offer these benefits.

  • Fidelity Cash Management
  • First Republic Bank
  • PNC
  • TD Bank

Citibank is another option to consider. They do charge for using another bank’s ATMs, but Citibank has a global presence with over 4,600 branches worldwide. Plus, they have ATMs in over 20 countries. There’s a good chance that Citibank has a branch or ATM in the country that you are traveling to.

How do you save money at the ATM when traveling internationally? Do you have a better way of getting local currency without paying ridiculous fees? Let us know in the comments below.

Related Articles

If you really want to maximize your travel rewards check out ChooseFI’s free travel rewards course.

How To Avoid Fees When Getting Cash When Traveling Abroad

 

ChooseFI has partnered with CardRatings for our coverage of credit card products. ChooseFI and CardRatings may receive a commission from card issuers.
Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest

Comment Disclaimer: Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

6 thoughts on “How To Avoid Fees When Getting Cash When Traveling Abroad”

  1. Our situation is not exactly as you are describing above, but it does involve exchange rates and getting local cash. We own a townhouse in San Miguel de Allende Mexico and spend a significant portion of the year down here (we happened to be staying here now thru April 30th). How we solve our money issues is that we established a checking account at the local CiBanco bank here in SMA and we use Transferwise.com to move money between our Wells Fargo Bank in South Dakota and our CiBanco account down here in SMA. We typically move $5,000 per transaction. We get the best exchange rates from Transferwise and their fee to do the transfer is just under $45. For example, I just moved $5k yesterday and the exchange rate was listed as $19.38 pesos to the dollar on Google. Transferwise gave me $19.33 pesos to the dollar, took $43.44 in fees and so, in effect, gave me a $19.16 exchange rate.

  2. I had a HSBC money market savings accounts that came with an ATM card that reimburses all your ATM fees including internationally. The interest rate I had on that account was poor though. Aspiration also provides you a debit card and reimburses all your ATM fees including internationally. That international travel benefit does not come automatically. You have to log in to your account settings to activate it for free. Additionally, interest rate today is 2%.

  3. BBVA Compass’s Simple card allows withdrawals for just a 1% transaction rate and no fees, while Bank of America charges a separate cash fee for every single charge or withdrawal, as much as $5 or $6 a pop! I got burned in Israel a few years ago, which is why I started the Simple account. It works like a charm here in China, where I live, although I do have to manually set travel alerts every so often. In contrast, my gold AmEx has NO international transaction fees, offered a 24-hour PIN I could use to do a cash advance (though I never used it), and automatically detects my travel plan from charges. Creepy but useful.

    Please also note that it’s not always helpful to use “partner banks.” I first used China Construction Bank in Beijing to withdraw money because they’re a partner for BoA, but BoA still charged $5 a withdrawal! It was cheaper to use my Capital One debit card at the same ATM to get money, and they’re no “partner.”

    Similarly, back in the US, Wells Fargo charged less for me to withdraw from my Chinese bank account than Bank of America, regardless of “partnership.”

  4. P.S. Not trying to be negative!! Just wanted to add some intel to the excellent information shared. I have had friends who thought an additional tool was to look for banks abroad with whom the US has agreements, but have found that’s not so great. I guess that at the end of the day, the best teacher is experience–at least, when you are going somewhere like China, where I live, and where information is not so readily available online.

  5. Great tip! I didn’t know First Rebublic reimbursed overseas ATM fees, and I already have an account with them (set up so that I could make referrals for student loan refinancing).

    I was considering opening an account with Schwab or SoFi just for that benefit because we plan to do some extensive international travel in the coming years, but now it appears I won’t have to.

    I’ve already got the Google Fi phone plan that will allow me to use my phone and plan with data at $10 / gb in over 170 countries. That would be another good affiliate to work into this post. 😉

    Cheers!
    -PoF

  6. Another bank with decent interest rates and reimburses ATM fees worldwide. There is no limit on the amount/number of rebates.

    One of the issues we’ve had in the past is bridge the gap from airport to ATM/bank to exchange. If you need a cab/money to tip and didn’t get cash in advance, an ATM in the airport is our current thought as how to get cash.

Leave a Comment