Foreign Finance 101: Managing Your Money Abroad

woman and boy on seats

You’ll probably have lots of questions when traveling overseas: what to pack, how to prepare and what to do about foreign currency. How do you get the best exchange rate when traveling abroad? What foreign card fees should you research and expect? Use the advice below to help you navigate spending money in a foreign country with ease.

Before you leave the country

  • Notify your bank and credit card companies about your plans to help avoid frozen accounts. Give specific information about where you will be and when, to protect you from theft and help ensure your bank does not cut off your access because of unusual activity.
  • Find out your bank’s foreign ATM and currency-conversion fees.
  • Ask if your bank has branches or any affiliate banks at your destination and find out what their locations are.
  • Sign up for your bank or credit card’s mobile app so you can track account transactions.
  • Carry contact information for your bank and credit card companies.
  • Download a currency converter app so you can make purchasing decisions quickly

Familiarizing yourself with foreign fees

Type Description
Your current bank’s foreign ATM fees Per-transaction fee issued by your bank – typically $2 – $5
Foreign ATM fees Fee charged by your credit card company for the use of your debit/ATM card at an international ATM to withdraw foreign currency
Currency conversion fees Fee usually issued by your bank for using your card in a foreign currency
Foreign transaction fees If you decide to be charged in the local currency, your credit card issuer may charge you a fee to convert the purchase into dollars (keep in mind, this varies depending on your credit card issuer)

While you’re there…

Once you’ve arrived, be sure to take the following steps to save and spend money wisely while abroad:

Minimize the most common costs

  • Withdraw larger amounts of cash to avoid paying more foreign ATM fees. Also be sure to use reputable ATMs, preferably those associated with financial institutions.
  • When choosing between paying in U.S. dollars or the local currency on a debit or credit card transaction, choose the local currency. The rate merchants use to convert currency overseas is usually less favorable than the bank’s rate.
  • Avoid converting your cash at an airport kiosk or vendor. Off-site currency booths and local banks often provide a better exchange rate.

Managing your money the right way

  • Keep track of receipts so that you can easily dispute any currency-conversion fees that you didn’t approve.
  • Negotiate with street vendors and independent shops; they’ll often inflate the price if they think you’re a tourist.

The do’s and don’ts regarding exchange rates

Use ATMs for withdrawals, despite the fees. It’s often the most inexpensive option. Use your debit/ATM card for purchases. There is typically a 1% – 3% fee for using your debit card in a foreign currency.
Use credit cards for large purchases. It’s safer and less costly. Check with your credit card issuer to find out if they incur foreign transaction fees – if not, it may be wise to use your card for day-to-day purchases. Take a cash advance on your credit card. You will have to pay a foreign ATM fee and foreign-transaction charge, plus pay interest.
Find out if your bank will increase your daily withdrawal limit just in case you have an emergency. Assume signs that offer “no-fee” currency exchange are a good option. Those rates are typically the most expensive.

In addition to following all of the above precautions, travel insurance is another way that you can protect your travel investment against lost or stolen ATM or credit cards. Learn more about how you can gain peace of mind with different coverage options.