Saving money on foreign exchange costs while travelling

When I was an exchange student in Europe more than a decade ago, I used Traveller’s Checks. Anytime I needed to replenish my supply of Austrian shillings (this was before the currency union in Europe), I needed to find someone to change money. And, of course, I had to pay a commission. The commission paid at the airport or train station, I found, was higher than that paid at a bank in town. Now, of course, few people use Traveller’s Checks, as credit cards and debit cards are much easier to use.

Using credit or debit for foreign purchases

If you have plastic branded with a major credit company logo, you can use it at a number of places. You can even use your card at an ATM to get cash in a local currency if needed. Doing so can actually save you money. This is because the inter-bank exchange rate is usually better than the rate used by the currency exchange services you see set up. Bringing your own cash or Traveller’s Checks and having them exchanged at a special service provider is likely to cost you.

However, while your currency exchange fee will be lower, you do need to watch out for other fees. You can check out XE.com for information about the bank fees, and network fees, that might be charged on top of the exchange fee when you use a credit card or debit card. In some cases, though, these fees still total less than what you would pay if you went to a service and exchanged cash for cash.

Another way to minimise the cost is to use the right credit cards. My Capital One card, for example, doesn’t charge a foreign transaction fee when I use it on overseas purchases. My MasterCard debit card does, though.

So if I want to save money travelling abroad, I should use my Capital One card, and pay it off when I get back. The HSBC World MasterCard also doesn’t charge foreign transaction fees. Before you leave the country, it’s a good idea to double check the fees to find out what will be charged so that you are prepared.

Protecting Your Money When Travelling

One of the reasons it’s a good idea to use your credit card when traveling abroad is for the protection. When cash is gone, it’s gone. However, you have options if your credit card is lost or stolen. You even have options if a Traveler’s Check is lost or stolen, though losing a debit card could result in some liability related to your bank account, and it can be difficult to have the money put back into your account after it is gone.

Make sure that you keep your credit card account number, and the customer service number, somewhere safe and separate from the actual card. That way, if the card is lost or stolen, you can immediately take care of the problem. Some people write down the information and leave it with a trusted friend or relative at home. That way, it isn’t at risk while you are travelling, and you can call for the information if you need to.

Limit the number of cards you to take with you; some recommend that you bring no more than two. And, while you will need cash for some purchases, be careful about how much you carry. Don’t carry more than you can afford to lose.