Before traveling overseas make sure you have the right plan for exchanging your hard earned cash for foreign currency. By following a few simple tips you can avoid the exorbitant currency exchange fees that are charged to unsuspecting travelers.
Follow these steps to save money while you travel:
Step 1: Use a card that does not charge a foreign transaction fee
Most credit cards charge as high as a 3% fee on top of foreign exchange rates. The good news is that some of the best travel rewards credit cards do not charge this foreign transaction fee. As a rule, Capital One cards do not carry a foreign transaction fee and they are also among our favorites when it comes to accumulating rewards. You can read more about our reviews of travel rewards cards here.
Travel rewards cards are also likely to have other perks that can make your travel a little more convenient and luxurious. One of our favorites, the Capital One Venture Card offers both concierge services and lost luggage reimbursement insurance through the Visa Signature program. Look for the word “signature” on your Visa to see if these perks are available on your existing card.
ConsumerFu’s picks for the top three cards you can carry for rewards and no transaction fee on foreign travel are:
Capital One® Venture℠ Rewards Credit Card
This is one of the most flexible travel cards out there. You aren’t tied to a specific carrier and you can book your travel through discount services like Kayak.com.
- Earns 2 miles for every $1 spent
- Rewards are paid in No Hassle Miles instead of miles tied to one airline
- No foreign transaction fee
- 10,000 mile signup bonus
Chase Sapphire Preferred
The Chase Sapphire card also offers tremendous flexibility and a generous reward package.
- Earns 2 miles for every $1 spent on travel and dining and 1 for $1 on all other spending
- 20% discount when you redeem through Ultimate Rewards
- No foreign transaction fees
- 40,000 signup bonus if you spend $3000 in the first 3 months
Capital One VentureOne
The VentureOne card is a flexible card for people with good credit. The reward structure isn’t quite as generous as others listed here, but it is still an excellent option for a general rewards travel card.
- Earns 1.25 miles for every $1 spent on any purchase
- 10,000 mile signup bonus when you spend $1000 in the first 3 months
- No annual fee
- There’s no limit to the miles you can earn and they do not expire
Step 2: Do not exchange currency at hotels or airports
Hotels and airports are notorious for charging high fees when exchanging currency. It is convenient to walk out of your room and exchange currency at the front desk before heading out to shore up the local economy. Bring a little cash with you and plan ahead to save a bundle.
Map out important locations around your hotel before you leave home. Get walking and driving directions for banks or ATMs where you can exchange currency or get an advance on your card. Make that your first stop before you start your day.
Step 3: Never sign a bill expressed in U.S. dollars
Many merchants will offer a service called dynamic currency conversion that at first blush may sound like a great convenience. When your bill is presented you are given the option to pay in local currency or U.S. dollars. If you opt to have your bill converted to dollars, you will pay an exchange rate selected by the merchant and may face additional fees from your card carrier.
Step 4: Be aware of all fees charged by your card carriers and banks
When exchanging currency at local banks or at ATMs be aware of exchange rates and any fees charged by the bank, or in the case of ATMs, your home bank or credit card carrier. Budget these fees into your spending before you leave so you have enough cash and credit available for the duration of your trip.
Some debit cards charge higher fees for cash withdrawals than they do for direct purchases. Know what these fees are so you know the best strategy for using your card.
Step 5: Consider Traveler’s Checks
Traveler’s checks may seem like a thing of the past, but they offer the most secure form of currency to carry when you travel. After paying a small fee at the time of purchase, these checks can be exchanged at current rates for no fee at banks in your destination country. Hotels, restaurants and shops also take traveler’s checks, but may charge a fee when you use them for a purchase. Unlike cash, traveler’s checks will be replaced by the issuing company at no charge if they are lost or stolen. They will be replaced more quickly than a lost or stolen credit card.
Follow these tips to avoid financial headaches while you travel:
Exchange a small amount of cash before you leave.
It is a good idea to leave home with a small amount of currency to handle initial expenses in your destination country. Having the correct currency available will allow you to avoid the high exchange fees at the airport and will give you cab fare, as well as lunch money when your hotel room isn’t ready upon your arrival.
Notify your credit card companies when you travel.
To avoid having your card declined for suspicious activity let your local bank and all of your card carriers know that you will be traveling. This is especially important if you don’t travel frequently.
It is also a good idea to make sure your cell number is on your bank and credit card records so they aren’t trying to contact you at your home number while you are away.
Write down the contact information of your credit card companies.
Be prepared to contact your credit card companies when traveling. Write down their contact information and keep the information in a separate location. It is especially important to have phone numbers available for those companies that accept collect calls. If your card is lost or stolen you have all of the information in a handy location.
Make sure your cards will be accepted while you travel.
Worldwide, Visa and Mastercard are accepted by more merchants than either Discover or American Express. It won’t matter how low your interest rate is or how many points you are offered on your travel purchases if the card you carry is turned away. The brand of your card isn’t the only reason it might be declined. Most Americans still carry magnetic strip cards. In many other countries the magnetic strips have been replaced with chip technology in order to reduce credit card fraud. These chip cards, known as E.M.V. (Europay, Mastercard, Visa) cards require either a PIN or signature and use a different card reader. Some travelers report having success when they ask merchants to swipe their magnetic strip cards, however, it is a good idea to check before you sit down for that fancy dinner.
Until very recently, it was possible for Americans traveling overseas to purchase a pre-loaded debit Mastercard known as a Travelex Cash Passport card. Unfortunately, this card is no longer available and existing cards will be deactivated by the end of April, 2013.