The first few times I traveled internationally, I made choices that unintentionally cost me money. But more than a decade later, after traveling to nearly 40 countries, I've learned the right money moves to make.
The choices that you make while traveling abroad can impact your bank account balance faster than you think, often in small ways that add up over a single trip.
The good news is that by making intentional choices during your adventure, and knowing what to watch for, you can sidestep common missteps to keep more money in your pocket.
Here are five ways you’re wasting money abroad without realizing it.
In this article
Paying Foreign Transaction Fees
Many U.S. credit cards charge a foreign transaction fee of around 3 percent. Here’s what that means: Every time you swipe your card to make a purchase in another currency, you'll be charged a percentage-based fee.
While that might not sound like a big deal, the extra fees can add up fast. Let's imagine you spend $3,000 on a summer getaway in Italy. If you bring a card with a 3% foreign transaction fee, you'll pay $90 in fees.
Instead, save money on vacation by using travel credit cards that don’t charge foreign transaction fees.
The Capital One Venture Rewards Credit Card and the Chase Sapphire Preferred Card are two examples. Always review your credit card’s fees before you board your plane. Otherwise, your trip will be more expensive than planned.
Traveling With Only One Credit Card
Thankfully, I’ve never lost a credit card or had one stolen while traveling. (Knock on wood). But I'm aware that this can happen and still take steps to protect myself financially.
I bring multiple credit cards. While this might seem obvious, most travelers, especially first-time international travelers, bring only one credit card. I always bring a second card as backup, stored separately from my primary card.
This way, if my wallet is stolen or I lose my purse, I have a backup payment option. Without one, I'd likely have to call a family member back home and ask them to wire me money.
That's an expensive ordeal, and an added cost that wasn’t included in my original vacation budget. I recommend taking a similar approach.
Not Paying Attention to ATM Fees
If you’re not careful, ATM fees can add up quickly when you're traveling abroad. But you can take steps to minimize or avoid them.
Like credit card issuers, many banks charge a foreign transaction fee, which may apply when using your debit card at an ATM.
But that's not all. Another cost you could incur while on a two-week European getaway is out-of-network ATM fees. When you use an out-of-network ATM, your bank may charge an extra fee, on top of the foreign transaction fee. This happens each time you use an ATM abroad.
Before planning an international trip, review your bank's fees and consider whether it's worthwhile to switch banks or open a second account for travel to minimize extra fees.
With a Betterment Checking account, for example, the ATM operator surcharge is automatically reimbursed worldwide, as is the 1 percent Visa currency conversion fee on foreign purchases and withdrawals.
Paying in Dollars Instead of Local Currency
Another common mistake is accepting the automatic conversion rate when you tap or insert your card to withdraw cash in another country.
Whether you're at an ATM or a server hands you the card reader, you'll be asked whether to be charged in U.S. dollars or the local currency. Choosing dollars may feel safer since it's your home currency, but it lets the merchant or ATM set the rate and tack on a markup, so you end up paying more.
Always pay in the local currency and let your card's network handle the conversion for you. You’ll get a better conversion rate. When I was an inexperienced traveler, I made this mistake plenty of times.
Exchanging Currency or Withdrawing Cash in Touristy Areas
Another mistake that will cost you is using airport money exchange counters and airport ATMs.
You'll find the least favorable exchange rates and highest ATM fees in more touristy areas. If you need to exchange cash, use a local currency exchange company located outside of the airport.
The same is true for ATMs. If at all possible, wait to withdraw cash in the local currency once you’re outside the airport.
Of course, most importantly, keep safety in mind and only use ATMs in well-lit areas with people around.
The Shortcut
Always pay in local currency at ATMs and card readers. Choosing dollars lets the merchant set the rate and you'll pay a markup.
A 3 percent foreign transaction fee on a $3,000 trip costs you $90. Check your card's fee structure before you leave home.
Withdraw cash outside the airport. Exchange rates and ATM fees are worst in tourist-heavy areas, including terminals.
Bring a second credit card stored separately from your primary in case your wallet is lost or stolen while traveling.
