HOW TO AVOID ADDED CURRENCY FEES WHEN TRAVELING ABROAD

Prior to embarking on travel abroad, how many travelers take the time to consider the smartest way to convert their home currency to the proper foreign currency ahead of time?

Unfortunately the answer is much less than you would think. Although most would want to ensure that they are not losing any value due to unnecessary fees, the problem is not always apparent. This article tries to bring to light the hidden pitfalls of currency exchange and arm overseas travelers with solutions that keep more spending dollar pocketed.

Use the Strong US Dollar To Your Advantage

In Europe, the dollar has generally strengthened. This is good news for domestic travelers heading abroad. And getting access to foreign currency is easier than ever, with more options than can be counted. That’s the good news, the bad news, its often more expensive, way expensive, unless you change your currency the right way.

Consider this: foreign exchange fees are often tricky, hidden and more often than not, exorbitant and many times all three. There are many of ways to exchange currency these days and I’m sorry to say, most of them are not worth your time. Add to this the bank’s ATM junk fee’s where users are penalized, often double, on the receiving and withdrawing ends of every transaction: meaning that one may find these costs becoming  astronomically out of proportion to the services provided.

With Currency Conversion, Education is Key

Therefore, I consider educating travelers on how to have the proper banking procedures in their travel tool box, prior to embarking on their journey, to be of primary importance. One of the reasons for the lag of getting modern travelers up to speed on this subject, is that in the past, travelers used to rely on travelers checks, which were once in vogue. Not enough has been done since then to bridge travelers over to more modern ways of currency usage.

What about converting dollars into foreign currency prior to leaving home? Nope…bad idea! Why do you think the big malls now have a proliferation of foreign exchange kiosks near every entrance? For enhanced customer service? Hardly… no, these exchanges bank a sizable service fee with every transaction which is quietly and discretely extracted before you  see your foreign money. Now add to this an outrageous exchange rate to exchange your dollars for pounds, euros or yen and you have a hidden and silent vacuum sucking your funds down the drain. So start out by avoiding this common pitfall before leaving for overseas. 

Use the Right Type of ATM When Traveling Abroad

You want to exchange your money abroad, but not through an exchange service.  If you want to carry local currency, then use an ATM or Debit Card in the target country once you’ve arrived to get your local cash.  Find out beforehand what type of cards are best used overseas.

Many US banks have partner banks in other countries, where you can take out money with a small fee or none at all. Check with your local bank and check with who their partner is at your destination. There’s also something called a global ATM network. All banks within that NW can use each other’s ATM’s with minimal or no fees. Here some links for different global services: Visa, Mastercard, CitiBank  and  Global ATM Allinance.

Even stock brokerage houses like Charles Schwab have great deals on ATM cards. This card has no minimum balance or hidden fees, accrues interest: you just need to transfer money into the account, from your own bank account. Charles Schwab refunds any ATM fees anywhere in the world.

Use Credit Cards Wisely To Avoid Hidden Fees

The other option is your credit card. Consider signing up for a card, before you travel, that waives any foreign transaction fees. Capital One offers some great travel credit cards with no foreign transaction fees. And as covered here by Capital One, always charge your purchase using local currency, to avoid “dynamic currency conversion” or “DCC”:

“You’re traveling internationally and that camera costs ¥8,000—how much is that in U.S. dollars? It can be difficult trying to calculate exchange rates at the point of sale. So, foreign merchants will sometimes offer to perform a dynamic currency conversion, or DCC. This service immediately converts the foreign price to your local currency, giving you a better idea of how much money you’re about to spend. Sounds nice, right? Well, there’s a catch. Merchants aren’t offering this as a public service—they’re charging a significant fee to do it, sometimes as much as 7 percent of the purchase price.”

Check out American Express, Chase and Bank of America for more no international transaction fee credit cards.

Install a currency converter App on your phone before travel to ensure you are getting the right rate of exchange. Always try to cash in your foreign currency back to dollars before you depart the country.

Always Check With Your Local Bank Prior To Travel Abroad

And last but not least, always tell your issuing bank, you’ll be making transactions abroad, before you leave home. Make sure that you have a pin number assigned and have made any needed daily spending limits adjustments.. That way your bank won’t automatically deny your card the minute you try to use it outside the US.

What To Do With Leftover Foreign Currency?

First try to spend whatever you have, purchase gifts or personal items that are sure to be cherished at home. You can save it for another time, keeping the money in  envelopes organized by country. Or even exchange it, Travelex exchanges leftover currency at its stores in cities and in airports, and by mail. Airport stores swap bills and most coins on the spot, but keep in mind that each store sets its own rates and fees.