Money For Your Trip Abroad

Like many people, I pay for most of my store, restaurant, hotel and transportation purchases here in the US with credit and debit cards. When I'm heading to Europe, my money preparations consist of making sure I have packed the correct credit/debit cards, and I'm good to go. No traveler's checks, no buying Euros here in the US, no exchanging dollars abroad.

The details on how best to spend your money abroad are nuanced, however. Larry Olmsted writes in Forbes about how to pay while traveling abroad, and discusses the costs associated with exchanging cash abroad, using credit cards, and relying on ATM cards for cash advances. 

Once you leave the country, deciding how to open your wallet can affect your trip cost more than the price difference of an airplane ticket or hotel room.

The best way to pay abroad according to Olmsted is by making cash withdrawals at ATMs with your debit card. Not only is the exchange rate better if you use a bank ATM, and preferably an ATM affiliated with your card's bank or network to avoid the 3 to 4€ charge per withdrawal, but you are safer since you are carrying less cash. Beware though of foreign transaction fees for ATM withdrawals.

using Visa and MasterCard branded ATM/Debit cards with no international transaction fee to get cash was the best way to go.

Next best, after ATM cash withdrawals, is using credit cards with no international transaction fees. There are fewer of these cards than you might think, but they are worth having.

…the problem is that many, if not most, credit cards have hidden surcharges for foreign exchange transactions, which means that using one bank’s card over another, or even different affinity cards from the same bank, can actually make your transaction cost more or less than slapping down another piece of plastic.

For some travelers evaluating which card or cards to use while traveling abroad warrants taking a look at the benefits the card offers–reward points, baggage fee discounts– and the costs–annual fees and foreign transaction costs. The free flights you earn or the free bag allowance on domestic flights may override the need to have a card free from foreign transaction fees.

A note about airport currency exchange. As detailed in Olmsted's article, many of the ATMs in major international airports are owned not by banks but by Travelex and other foreign exchange companies and have been found to charge up to 10 or 11% higher than bank machines. Ojo.

The takeaway: Research the best ATM and credit cards for overseas use and watch where you withdraw cash.

If you'd like more detailed information on cash versus credit card use in Spain and Portugal, call us or drop us a line. We love talking about about travel in our two favorite countries.