One of the most important practical matters to consider when it comes to international travel is currency. Do you need to carry cash, and if so, how much? Can and should you use your credit cards? What about withdrawing money from ATMs? Is it still necessary to bring traveler’s checks? What about conversion rates and fees? We have the answers, and have put together a handy guide of the best way to carry and spend your money while out of the United States.
#1 Cash
Still the most widely accepted, easiest to use currency—cash continues to be the undisputed king. It’s important to have plenty on hand when traveling abroad, if for nothing else than to cover tips, unexpected events, taxi rides, and incidentals like emergency ice cream cones. You can use credit cards in most places in more developed countries, but even in places like the UK and Australia many smaller vendors only take cash. You can assume that vendors in less developed countries, especially in the more rural and less touristy areas, also only take cash. We recommend that before you leave the foreign airport, you carry at least $100-150 in local currency. Keep that on your person, not in your checked luggage.
Guests have a few choices for where to get their spending cash while overseas:
- Bring it all with you
- Exchange traveler’s checks
- Visit a foreign ATM
We will cover ATM cards and traveler’s checks later in the article, but for now, here is our advice for having all your cash on hand before you leave.
You can exchange US dollars for foreign currency at your home airport, or at most full-service banks. The exchange rate at home will not be as favorable as if you visited an ATM or exchanged traveler’s checks, but you will have more peace of mind knowing that you have enough money to last you through your trip.
It is often worth it to shop around for the best exchange rate at local banks, credit unions, and currency exchanges. Simply call and ask about their current rates. Our favorite source for finding out the current exchange rate for international currencies is XE. The website is very easy to use, and offers a simple currency converter and up-to-date exchange rates.
#2 Credit Cards
Credit cards are another great option for carrying money while out of the country. Credit cards are easy to use, simple to carry, and offer layers of protection thanks to their anti-fraud measures. In addition, credit cards are accepted at most places.
Using credit cards overseas is virtually as simple as using them in the United States, but there are a few steps to take and research to conduct to ensure that you’re able to use them without a hitch:
- Tell your bank where you’re going. Credit cards take fraud protection measures, including shutting off your account if your card is used in an unfamiliar location. When you inform your bank of your plans to be out of the country during a certain period, they will make a record on your account, which will stop your overseas charges from triggering an account freeze.
- Consider foreign transaction fees. Most credit cards automatically add a fee of around 3% to charges made outside of the United States. The exception to this rule? Travel credit cards which, along with Capital One and Discover cards, do not charge its users foreign transaction fees. Check with your credit card provider to avoid unexpected fees.
#3 ATM and Debit Cards
With the exception of the emergency cash that you travel with, and in countries like Cuba where American debit or ATM cards will not work, it’s best to withdraw cash in local currency once you land. The currency exchange rate will be at the interbank exchange rate, the lowest exchange rate you can find—so withdrawing money locally is not only convenient, it’s also the cheapest way to get cash.
To withdraw money abroad, your card must be connected to a worldwide network like PLUS, Maestro or Cirrus—if your card isn’t connected, it won’t work. If you don’t have a worldwide network connected Visa or MasterCard debit card, it might be worth it to open a new account to enable you to access funds from outside the country. You could use your Visa or MasterCard to withdraw money, but that would incur a significant cash advance fee.
Speaking of fees, it’s best to know which fees you’re likely to get charged with for withdrawing cash internationally.
- Many banks charge users an out-of-network fee of a few dollars every time they use a foreign ATM.
- Local ATMs may charge a per-use fee. Whether the fee is from the machine itself or the bank that owns it, that could be a few more dollars charged for each withdrawal.
- Finally, like when you use certain credit cards outside of the United States, you can be charged a foreign transaction fee when you withdraw money from an ATM.
If you don’t want to pay these fees, it may be worth it to find a debit card designed for travelers—look for a card that waives some or all of these fees, and reimburses ATM fees from out-of-network machines.
If you want to use your debit card to pay for items, it will work just like a credit card. And also just like with a credit card, be sure to alert your debit card provider that you’ll be overseas to avoid having your account frozen.
#4 Travelers Checks
A great, safe, easy-to-replace substitute for cash, traveler’s checks are still useful to modern travelers. In past decades, they were extremely popular because they could be exchanged for cash virtually anywhere. Now, because ATMs are so widespread, and fewer vendors accept traveler’s checks, they’re less widespread, but there are still reasons to use them:
- Because traveler’s checks can only be cashed by the person who purchased them—and require both identification and a signature—they’re not very attractive to thieves. And if they do fall into the hands of someone else, the checks are worthless to them and will not be a loss for you.
- If you don’t have or don’t want to carry a credit card, you can use traveler’s checks instead. You can carry a large amount of money without feeling vulnerable to fraud or loss.
- If they’re lost or stolen, traveler’s checks can be replaced within around 24 hours. Call the institution that issued the check to replace it—you can purchase traveler’s checks from American Express, Travelex, Visa, MasterCard, and most banks.
The main drawback to traveler’s checks is that they’re no longer widely accepted. Generally, you can use them at hotels, and to get cash at banks, but few smaller merchants accept them. We recommend using them as a backup for the three other forms of currency. In addition, you will want to write down the traveler checks’ serial numbers, and have them handy in case you need to replace the checks.
All in all, the best idea for using currency when traveling internationally is to be prepared with a number of different ways to spend your money. Credit cards when possible, and for larger expenses like flights, sit-down meals, rental cars and lodging; cash for smaller expenses and when credit cards aren’t accepted; and a debit card and traveler’s checks on hand for when you need more cash. By preparing for the unexpected with redundant means of carrying money, you’re more likely to have a great time on your next international vacation!
