The Best Way to Carry Money Overseas


credit card passport travel vacation moneyBefore you leave for your next trip abroad, take a moment to reckon dollars and cents — or should we say pounds and pesos? Get the most for your money when traveling internationally by doing a small homework first.

The most vital step is to know your options. In days of yore, traveler’s checks were the most standard way to carry money overseas — but today’s travelers are much more likely to rely on confidence cards and ATM withdrawals, which usually offer better exchange rates and lower fees.

What’s the best option for you? And how can you avoid those pesky currency conversion fees when making buys abroad? Read on for answers to these questions and a wide-ranging roundup of all your currency conversion options when you’re traveling overseas.

Best for: Generous buys such as airline tickets, hotel bills, car rentals and restaurant meals.

Pros: The largest advantage to using confidence cards while traveling overseas is that confidence card buys are exchanged at the interbank exchange rate, usually the best rate you can get for currency exchange. While most confidence card issuers payment currency conversion fees each time you make a buy in a foreign currency (generally 1 percent from Visa or MasterCard plus an additional 1 – 2 percent for themselves), these fees are typically lower than those you’d pay to convert your own currency at a change bureau. And here are a few cards out here (many from Capital One) that do not payment any foreign transaction fees at all, not even the ones from Visa or MasterCard. Check out for a list.

Cons: Some restaurants, supplies and even hotels won’t take confidence cards, so you’ll need to have cash on hand at all times. While you can use confidence cards to get cash advances at ATMs, bear in mind that they’ll be subject to any finance charges your confidence card company imposes — which can add up very quickly. Plus, if you’re not home by the time the bills come in and you haven’t made arrangements to pay them, you’ll be hit with hefty finance charges on these advances.

One problem for U.S. travelers is the growing prevalence of “chip-and-PIN” confidence cards in Europe, Asia and South America. Designed to reduce fraud, these cards rely on an embedded chip that transmits information to a merchant, which the consumer then verifies by entering a PIN. While U.S. cards with magnetic stripes will still work as long as here’s someone to smack them, many travelers report problems using their cards in voucher vending kiosks, at gas stations or in other places featuring automated payment machines. If you find yourself in this dilemma, your only alternatives are to find an attendant to scan your card or to use cash instead.

These cards are not yet widely available in the U.S. But, several banks, including Citi, Bank of America and Chase, have begun issuing dual confidence cards that use both the magnetic stripe and the embedded chip, and Travelex has introduced a prepaid chip-and-PIN MasterCard that works like a hybrid between a confidence card and a traveler’s check. (See the Traveler’s Checks and Check Cards part of this report to learn more.)

What You Need to Know: The first thing you should do if you are traveling abroad with a confidence card, even if you only plot to use it in case of an emergency, is to call the issuer and question which fees will apply to your buys, both in local currency and in U.S. dollars. We recommend calling before each trip, as these policies may change without notice.

While you’re on the phone, you’ll also want to let your confidence card issuer know when and where you will be traveling — that way the sudden international activity on your account won’t trigger your issuer’s fraud alert system. As a precaution, we recommend bringing two confidence cards on your trip in case one stops working. Finally, get a phone number that you can use to call the company from overseas if your card is lost or stolen. (The 800 number on the back of your card typically will only work in the U.S. or Canada.)

Some merchants (particularly in Europe) offer what’s known as dynamic currency conversion, which means that they’ll payment you in dollars very than the local currency. Since some card issuers will waive the currency conversion fee if your overseas buy is made in dollars, dynamic currency conversion could help you save a few coins. But, keep in mind you’ll nearly always get hit by a conversion fee from the merchant instead — sometimes up to 5 percent — so you may end up losing out on the deal. Be sure you know which fees apply to either option before deciding which currency to use.

A few other caveats to bear in mind: Some hotels and car rental companies may place holds on your confidence card for the amount of your total expected bill. This can use up your confidence line before you’ve really incurred and paid for the charges. All merchants are supposed to inform you if they do place a hold or “deposit” on your card. If they do, make sure you clarify that the hold has been removed when you’ve paid your bill in full.

Keep in mind that you may not have as much protection overseas as you do at home when problems rise over inaccurate charges. Incidents are always being reported of travelers being charged twice for the same item or for items they never bought, and confidence card companies have been unwilling or unable to intercede on their behalf. Always watch merchants imprinting your card and keep your total admission money. After you get home, check your confidence card statement. If you see charges you didn’t make, call your creditor and question them to dispute the charges.

atm woman sunglasses money cash machineBest for: Getting cash in local currency.

Pros: You’ll get the same fantastic interbank exchange rate when you make cash withdrawals with your debit or ATM card as you do when you make a confidence card buy. With ATMs available in major cities and airports all over the world, this is generally the cheapest and most well-located way to get cash in the local currency.

Cons: Each cash withdrawal you make will usually be subject to currency conversion fees, foreign ATM fees or other charges from your bank and/or the local bank that maintains the ATM. For more information, see ATMs Abroad. Debit cards work pretty much the same as fixed confidence cards for buys, but if your card is lost or stolen you may not have the same protection. By U.S. law, as long as you report your card missing within two business days, your maximum liability for use of that card will be $50 — the same as for a confidence card. But, if you wait any longer, you could be reliable for hundreds of dollars in unauthorized charges.

What You Need to Know: If the ATM card from your home bank isn’t connected to the worldwide Cirrus or PLUS networks, you may want to look into getting a MasterCard or Visa debit card. While they look and can be used like fixed payment cards, they really debit your checking account the same way your ATM card does.

If you are renting a car, you should be aware that while you can use a debit card to pay for the rental charges, you might not be able to reserve the car with this type of card.

Finally, don’t forget to call your bank and make it aware of your travel plans; as with confidence cards, sudden international activity using your debit card could cause your account to be frozen.

Best for: The first 24 hours of your trip — to tide you over until you can find the nearest ATM.

Pros: It’s often a excellent thought to get some foreign currency before you leave home so that you have cash on hand to handle your immediate expenses — like buying a meal at the airport or taking a cab to your hotel. This way you’re not stranded without cash if the airport ATM isn’t working or you arrive after the local exchange bureau has closed.

Cons: You typically won’t get a fantastic conversion rate from your home bank, and you may also have to pay fees or commissions. If you’re traveling to a major international airport in a generous city, which will likely have multiple ATMs and change counters, getting currency beforehand probably isn’t necessary.

What You Need to Know: You can get foreign currency from your local bank, online or at the airport. Try your local bank first, as they may waive fees for certain accountholders. We recommend bringing $100 – $150 worth of foreign currency. See Buying Foreign Currency: Get More Bang for Your Buck for tips.

Best for: Emergency backup if you can’t find a functioning ATM (checks) or a secure alternative to cash (checks and check cards).

Pros: Traveler’s checks and check cards grant more security than cash since they can be replaced (usually within 24 hours) if lost or stolen. While traditional traveler’s checks have largely gone the way of the dinosaur, Visa and Travelex offer travel cards that are prepaid like traveler’s checks but work like confidence cards for buys and ATM withdrawals. To avoid the aforementioned problems that U.S. travelers have at overseas chip-and-PIN machines, Travelex even offers a chip-and-PIN card (available in several different currencies). Traditional checks are still sometimes useful as currency if you can’t find a functioning ATM.

europe travel traveler tourist woman mapCons: The exchange rate for traveler’s checks is not as favorable as the interbank rate you’ll get when using a confidence or debit card, and very few merchants accept the checks for buys these days. You’ll also have to pay commissions, shipping charges and/or conversion fees to buy and cash the checks. The prepaid cards give you better exchange rates, but here are plenty of fees here too — look out for activation fees, charges for reloading the card, ATM charges or inactivity fees. In most cases, you’re probably better off using your own debit card.

What You Need to Know: Keep your checks’ serial numbers in a secure but separate place from the checks themselves in case they’re lost or stolen.

Best for: Emergencies when you need money sent overseas in a rush.

Pros: If you find yourself stranded overseas without cash, someone at home can wire money to you and you’ll have it within a day — or even a few summary.

Cons: Fees for sending money abroad can run anywhere from 1 to 10 percent or more; the quicker you need the money, the more expensive it will be.

What You Need to Know: The best-known companies for sending money are Western Union and MoneyGram. Both payment variable fees depending on how much money you’re sending and where you’re sending it. The slower the service you choose, the more economical the price.

Other choices for sending money abroad include bank wire transfers or international postal money orders from the post office. While less expensive, these methods may take more time.


The Best Way to Carry Money Overseas


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