We get a lot of questions about how we deal with foreign transaction and ATM fees when traveling from country to country, so thought a quick blog post would be helpful.
Our situation is a little bit different since we travel full time, but our solutions and research and experience allows us to be able to give you some good advice when it comes to cash and credit cards and foreign transaction fees while traveling abroad.
When we started researching travel full time, we knew we needed to change some things. We knew we would be taking out cash in countries all over the world. We knew we would almost never have cash or physical checks to deposit. We knew we didn't want to be charged foreign transaction fees when buying gas or groceries. We also wanted to get as many points as possible when purchasing airline tickets and booking hotels online, which next to food remains our largest travel expense.
This led us to set up several different accounts for different reasons. We have an AMEX Rewards Plus because of points and because we've always had one. We have a Chase Visa credit card because the points are better than AMEX and it is more widely accepted around the world. Both cards have zero foreign transaction fees, so we aren't charged extra when we use them in foreign lands.
More importantly, we have a banking account with Charles Schwab. We don't allow online transactions with this card due to some fraud we had in Sri Lanka (that's another story), and our daily withdraw limit is quite low for the same reason.
Charles Schwab reimburses us for every ATM fee associated with cash withdraws. It’s basically a dream card for full time travelers. It also has an handy app that allows us to deposit checks by taking photos. Something you may not really care about when you are taking a short vacation, but it's really important for us.
But for the casual traveller, how do you know if you should take out cash at home and exchange the remains at the airport, or if you should just get cash at the airport? The best advice we can give you is this: call your credit card company and ask about their foreign transaction and ATM withdraw fees.
If they aren’t too much, it’s just easier to get local currency at an ATM when you land. I say this because I really hate the currency exchange. They always take a percent and don’t always offer the most up to date exchange rates. But beyond that, I just don’t like to wait in lines. Especially just when I've gotten off a plane and have my bags and a new city/country to explore.
If you plan a little bit, you can get enough cash to last your entire trip. If you are traveling in Europe, this is easy to do since you only need one currency. Some countries are cash heavy like Japan (yes, Japan) and Indonesia. It’s always better to have more cash than you think is necessary, especially if you have a high withdraw fee at the ATM.
Some credit cards have a foreign transaction fee for charges as well, so it’s good to have that conversation with your credit card company before you leave. Tell them where you are going so they don't cut off your card when you are trying to get gas or buy dinner at 7-Eleven.
Transaction fees are another reason to have cash. You pay that fee once upon withdraw and then you don’t have to worry about it again. But again, call your credit card company and ask them some questions.
We’ve managed to have almost no cash when we leave a country. I think the exception to this was when we left Mexico and had way too many pesos. Luckily our friend in LA was heading to Mexico and bought them from us!
Part of that is due to not caring about foreign transaction fees – we use our credit card and take out cash without regard. And if we are left with any straggling bits of cash when we are leaving one country for the next, we play a game called – What Can We Buy at the Airport for Under 2,000 rupiah/dinar/yen/lira? Generally you can find something from a vending machine. Barring that, there are often places to donate your spare change. *This reminds me of another reason to dislike the currency exchange - they don't take change!*
But what if I’m not comfortable carrying around hundreds of dollars in cash?, I hear you ask from the other side of this blog post. I would tell you that by and large the world is a safer place than you’ve been led to imagine. The world isn’t full of bandits looking to steal your booty.
I would also tell you to relax. You are on vacation. If you aren’t comfortable with that much cash, get comfortable taking it out in installments and consider the withdraw fees to be another travel expense. Or find a way to stomach those pesky transaction fees from your credit card company.
At the end of the trip are you going to look back at your pictures from Bali and think: Gee, I wish I had taken out more/less cash? Probably not.