When it comes to traveling, leaving your country of origin will likely lead to a need for some level of currency exchange. Most nations have their own currencies, and some countries have united with other countries in order to standardize to a common currency. For example, most of the states within the European Union have decided to accept the Euro as their official currency. There are exceptions such as Poland and the Scandinavian countries, but the Euro is accepted in the Baltic nations as well as popular destinations like France, Spain and Italy. Other nations that are exceptions are Zimbabwe and Panama, both of which use the U.S. dollar as their main currency. If you find yourself needing to exchange currency, you’ll likely incur foreign exchange fees.
Use the Right Credit Card
When traveling, one of the best ways to avoid foreign exchange fees is through the strategic use of a credit card, with strategic being the operative word. Some credit cards will charge foreign transaction fees. These fees can sometimes reach nearly 3% of the purchase price in dollars. That’s a pretty hefty surcharge that comes with the benefit of using a card. However, this fee does not apply to all types of cards. There are some credit cards that waive foreign transaction fees for their customers. Before leaving on your international vacation or business trip, it’s a good idea to see if any of your credit cards waive foreign transaction fees. If you don’t have such a card, it might be worth the effort to get one before your trip.
Using a credit card abroad is a great alternative to cash. You can avoid the foreign transaction fees that you’ll find at the airport or a local bank or ATM. You can also minimize your financial risk. Getting robbed of your cash will likely mean that you’ll never see it again. If a mugger takes your credit card, you’re generally protected from having to pay for fraudulent transactions (if you report the card as stolen), and your card issuer will likely ship you a new one immediately.
Transfer Only What You Need
When going to a foreign country, it might be tempting to transfer all of the currency you have in your wallet to the local currency. This may not be the best idea. You might want to consider only exchanging or using an ATM for what you think you’ll need, since any cash that’s left over will need to be transferred back to your home currency when your trip ends. There’s a transaction fee when you exchange your money going into a new country, and there’s a transaction fee when you exchange your money back on the way out. Given that you can get charged twice in this scenario, it’s a good idea to try and minimize these fees.
Get Travel Insurance
Travel Insurance is not likely to save you on foreign exchange fees, but it can protect you from many of the common problems that can arise while you’re on the road. Trip insurance can help you out if you become sick or injured during your travels. It can also assist you if you need to interrupt your trip (post-departure) for a covered reason. Furthermore, travel insurance with trip cancellation coverage can reimburse you for a wide variety of covered scenarios that cause you to cancel your trip before it is scheduled to take place. There are many benefits that can protect your financial interests during a vacation.
When traveling abroad, currency exchange fees can add up quickly and diminish your spending money. You can wind up spending quite a bit more because you lose part of the value of your hard-earned money with each buy/sell transaction. Taking the right credit card can help you avoid having to exchange actual cash, and it can also help you avoid foreign transaction fees. Furthermore, exchanging no more than absolutely necessary will help you avoid additional foreign transaction fees upon returning to your home country.