Three costs to beat
Spending abroad costs you in three places: the exchange rate spread, the card's foreign transaction fee and ATM fees. A good setup pushes all three close to zero. The benchmark is the mid-market rate, which is the one you see when you look up a currency pair online, and the card networks convert at very close to it. Airport exchange kiosks and hotel desks can take ten percent or more through a poor rate, even under a sign that says no commission. A typical foreign transaction fee is three percent, which is thirty dollars on every thousand you spend, and plenty of credit cards and some checking accounts charge none.
The setup before you go
- Carry two credit cards on different networks plus a debit card, and keep one card apart from your wallet, because cards get swallowed, declined and stolen.
- Ask whether your issuer still takes travel notices, since many no longer do, and make sure it has your current mobile number and email for fraud alerts.
- Know your debit card's PIN and daily withdrawal limit, and raise the limit if you will need more.
- Bring one or two hundred US dollars in clean, recent bills as an emergency reserve that can be changed almost anywhere.
Cash from ATMs
Get local cash from a bank's ATM after you land, not from a kiosk before you leave. Prefer machines attached to a bank branch, during business hours if you can, because a swallowed card can then be retrieved. Stand-alone machines in tourist districts tend to charge the highest fees and offer the worst rates. Fees are charged per withdrawal, so take out larger amounts less often. Use the debit card and never the credit card, since a cash advance on credit starts accruing interest the same day.
Always pay in local currency
Card terminals and ATMs abroad will often offer to charge you in dollars. The practice is called dynamic currency conversion, and it is presented as a courtesy. It is a markup, commonly three to seven percent, set by the merchant's bank in place of your card network's rate. Decline it every time and choose the local currency. At an ATM the same offer appears as a screen with a guaranteed rate, and the right choice is to continue without conversion.
Tip Find out before you go whether the country runs on cards or on cash, because the answer varies more than you would expect. Spend your coins before you leave, since exchange counters take only notes.
