Money Matters
Through my travels, I’ve learned a lot about dealing with money when you’re traveling, and I am here to share what I’ve learned with you. I hope that with this information, you can save yourself some money and headaches.
Cash vs. Cards
The first thing you need to figure out before you leave home is whether your destination is primarily a cash economy or a credit card economy. A Google search will probably answer your question, but generally, the less developed the country, the more likely it is to be cash-based. So, for instance, if you’re traveling to Cambodia, you’re more likely to need to pay in cash than if you’re traveling in France.
In some places, you will find it nearly impossible to use credit cards. You are most likely to be able to use credit cards in hotels and some higher end restaurants, but you will often be charged a convenience fee (like a 3% surcharge).
In other places, you will find that cash isn’t accepted. I’ve been to a few businesses and sites in Europe where payment must be made by card. Yet in the same country, some businesses were cash-only, So it’s best to have access to both.
And in other places both cash and card are OK. Again, just do your homework.
Using US Dollars
While you’re doing your Google search, you should figure out whether US dollars are readily accepted (or even preferred).
In most countries, US dollars are not accepted. You will have to use the local currency. (More on that later.) For example, if you go to the EU and attempt to use US dollars, you will be met with derision. The locals will think you are stupid or arrogant. Probably both.
In other countries (like Cambodia, the Bahamas and Costa Rica) and in and heavily touristed parts of other countries (like Mexico and Argentina), US dollars are welcome, but you will likely receive change in the local currency.
And in still other countries (like Ecuador, Panama and Zimbabwe), the US dollar IS the local currency.
I find that when I’m traveling to countries that widely accept the US dollar, it helps to have a stack of small denomination US bills. Because of counterfeiting issues, anything larger than a $20 is often not accepted. (And twenties may be pushing it.) On my trip to Cambodia, I carried fairly large stacks of $1 and $5 bills which were very useful.
If you are taking US dollars with you, make sure the bills are in very, very good condition. Bills will often be rejected for the tiniest imperfection (like a tiny tear along the edge or a miniscule pen mark). I was trying to use some $20 bills to pay for visas at the border of Laos, and nearly all my bills were rejected because of their condition even though no one would have given them a second thought at home. And the larger the denomination, the more likely it is to be rejected. A $100 bill I brought from home to SE Asia was basically unusable because it was not in pristine condition.
No matter where I'm going, I carry a couple hundred $US in cash when I travel. It's my emergency money if all else fails.
Getting the Local Currency
ATMs
I don’t think I’ve crossed a border in the last few decades that did not have an ATM available within a few yards of the border. ATMs are my preferred means of getting local currency.
That being said, you need to be careful using ATMs and always have a backup plan.
First, before you use any ATM, take a good look at it – especially the area where you insert your card. I have come across a number of ATMs that look like they may have card skimmers that are planted by scammers who will steal your card information. When in doubt, use a different ATM.
Also, be ultra-cautious about protecting your pin number. I usually cover my hand with my other hand when I’m punching in my pin number. And don’t let anyone look over your shoulder.
Second, if possible, you should use a bank ATM – preferably one attached to a brick and mortar bank branch. They will usually give you lower fees than stand alone ATMs For example, all over Europe, you’ll find stand alone “Euronet” ATMs that should be avoided if at all possible because of their exorbitant fees. Security is usually better at the banks too.
Third, pay attention to the conversion rate. If you are given an option using a dollar amount or the local currency amount, always choose the local currency. That way the conversion will be done by your bank which will almost always give you a better conversion rate than the ATM.
Fourth, pay attention to the fees. Most ATMs will charge you a withdrawal fee. These fees can vary significantly, so shop around.
There are two ways to eliminate or lessen your ATM fees. The best way is to open an account that will reimburse your ATM fees. I have a checking account at Charles Schwab that reimburses me for my ATM fees. Highly recommend.
The second way to lessen your ATM fees is to make as few withdrawals as possible. Fees are usually charged on a per transaction basis, so you will be charged the same amount if you withdraw $30 or $300. So from a fee avoidance perspective, it’s more cost effective to make one withdrawal of $300 than 10 withdrawals of $30.
Lastly, have a backup. In addition to my Schwab account that I use exclusively for travel, I have a Bank of America account that does not reimburse me for my ATM fees. I take both ATM cards with me when I travel. I usually carry the Schwab card with me and leave the Bank of America card at the hotel. That way, if my Schwab card is lost or stolen I have a backup. Also, not every ATM will accept every card, so sometimes it’s good to have an alternative. In a worst case scenario, I hear that you can have funds wired to you via Western Union, but Western Union is not available everywhere, and I’ve never had to do it, so I can’t speak from first hand experience.
Wise and Revolut Cards
Wise and Revolut cards are similar to debit cards -- the difference being that you can download money to the cards and convert it to the local currency for about 40 different currencies. You link the card to your bank account and then can go online, have your bank transfer money to your Wise card, then convert the money to Euros or Pounds of Yen or whatever currency you need and is available. The conversion rates are generally good and the fees are minimal. My Wise card has much better currency exchange rates and lower fees than my Bank of America debit card, for example. You can then use your your Wise or Revolut card just like any debit card. You can use it to withdraw from an ATM or to pay at vendors. There's a minimal startup fee to have the card sent to you. (I paid $9 US.) I'm just starting to experiment with my Wise card and won't use it as my primary debit card (I'll use my Schwab card), but it seems like a very good backup option. People whose opinions I trust swear by their Wise and Revolut cards. I'll update this section once I get more hands-on experience.
Currency Exchanges
I almost never use currency exchanges, but I know others do. Again, watch the conversion rates and fees at currency exchanges. In heavily touristed areas and airports, the rates and fees are often terrible. Shop around.
Bringing Foreign Currency from Home
Some travelers like to arrive at their destination with some of the local currency in hand. It’s not something I generally aim to do because I’ve never been unable to get local currency (or in the alternative, use a credit card) as soon as I cross the border. If you really, really, really want to arrive with some of the local currency, talk to your bank well in advance of your trip. They may be able to get you the currency but they may charge you a substantial fee.
The only time I’m likely to arrive with local currency in hand is if it’s currency left over from a previous trip. I almost always have Euros left over at the end of my trips to the Eurozone, and I just keep them for my next trip.
Credit Cards
If given a choice between cash and a credit card, I will always choose to use a credit card (unless the business tacks on a convenience fee). The key to using a credit card is to make sure that you have a card that does not charge a foreign transaction fee. Check with your card provider to see if your preferred card charges a fee. If it does, leave that card at home and get another fee-free card.
And just like ATM cards, I always travel with at least two credit cards -- one that I carry with me and one that I leave at the hotel in case the first is lost or stolen or blocked by the bank. (It happens sometimes when they think there may be fraud -- or if there actually IS fraud.)
The advantages of using a credit card are twofold. First, your fee-free credit card will often give you a better exchange rate than any other form of payment. Important note here: if you are making a purchase and you are given an option to pay in your home currency or the local currency, always choose the local currency. Almost without fail, your bank will give you a better exchange rate than the card processor that is offering to let you pay in your home currency.
The second advantage of a credit card is fraud protection. Most credit cards offer fraud protection. If you use cash or debit, you may be out of luck.
So which credit card should you use? I like the Chase Sapphire cards. The “Preferred” level has nice perks, a low annual fee and often has a pretty good sign up bonus with points that can be transferred to many airlines and hotels. If you travel a lot like I do, the “Reserve” level card may be even better. It has a high annual fee, but most of it can be recouped through travel credits. Plus it comes with perks like lounge access, pretty good travel insurance and other benefits. You’ll have to do your own math, but in my case, the “Reserve” more than pays for itself. Capital One also has some good options. I have their Venture X card -- which is their swanky travel card, but I prefer to use my Chase card because Chase's transfer partners are better for me. I usually fly out of a United hub and United is a Chase transfer partner but is not a Capital One transfer partner. So, it's easier for me to use Chase points than Capital One points.
I do not recommend using American Express , Discover or Diners Club as your primary travel card. They are not nearly as widely accepted as Visa or Mastercard branded cards. And if you're old enough to remember traveler's checks, those have gone the way of the dinosaur.
If you want more information on cards that are good for travel, I highly recommend The Points Guy. It’s a great resource for travel cards and getting and redeeming miles.
Travel Insurance
Last but definitely not least, I recommend that you purchase travel insurance for trips abroad. You may also want to get it for domestic travel, although I usually don’t because I have other insurance that covers most things when I’m in the United States.
If you are going on a tour or a cruise and the provider offers insurance, do not buy your insurance through the provider. If the provider goes bankrupt, your insurance may be worthless. It's far better to get insurance through a third party insurer.
Your credit card may offer some travel insurance, but I still think it’s worth it to purchase separate coverage – especially coverage for medical evacuation/repatriation in case of disaster. Also, you should check your health insurance policy to see if you are covered when you are abroad. Many policies offer limited or no healthcare coverage outside the United States. (Medicare, for example, does not cover you outside of the United States but some Medicare Advantage plans do.) My family recently had to make claims on a travel policy when my daughter contracted COVID while she was traveling around Europe. Her policy was only a couple of hundred dollars and we saved thousands.
As for carriers, I recommend World Nomads.. Their policies are reasonably priced. Also, when we had to make a claim when my daughter got COVID while abroad, they paid up with minimal hassle.
Safe travels!
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