One of the headaches of traveling internationally is figuring out the least expensive way to make payments in foreign currency. Here are the most common options for accessing your money abroad and the fees you should know about.
Credit cards are one of the safest options abroad because you have zero liability if your card is lost or stolen. Plus, Visa and MasterCard have massive global acceptance.
The downside is that many credit cards charge a foreign transaction fees on every transaction made in foreign currency, often as high as 3%. An increasing number of credit cards no longer have this fee, but many still do. Read the fee schedule for your card carefully.
Most debit cards also have
, and they don't offer the same financial protections, so they have fewer advantages than credit cards. On top of that, most debit cards also charge a fee of several dollars, sometimes as much as $5, for withdrawing foreign currency at ATMs. Even worse, some banks charge you with a foreign transaction fee and ATM fee for withdrawing cash.
Some issuers, such as Bank of America, have partnerships with international banks that let you use their ATMs for free. Ask your bank if they have any such partnerships. If not, keep your withdrawals to a minimum, or apply for an account that doesn't have these fees (Capital One 360 is one of the few).
Prepaid travel cards
Visa and MasterCard offer prepaid travel cards in the currency of your choice, as do some third-party companies like Travelex. It's free to make purchases, so there are no foreign transaction fees to worry about. But expect to pay an ATM fee of several dollars for cash withdrawals. Some prepaid travel cards also tack on fees for buying the card, reloading money and even for inactivity.
Cash in foreign currency
Cash is still accepted almost everywhere. But don't get suckered into
at the airport or tourist traps, where you're likely to get hit with hidden fees and poor exchange rates. Before you travel, order cash from a major bank. Not only will you get the best exchange rates, but you also will probably only be charged a small delivery fee if you're a customer. Some customers may even get the fee waived. If you don't have accounts there, you may have to pay a small service fee.
Once a tried-and-true way for spending abroad, travelers checks (or cheques) are past their prime. They aren't accepted by all merchants, you may pay a service fee of 1% to 3% to buy them and some businesses charge a fee for accepting or cashing them. The benefit is you'll be reimbursed if they are lost or stolen, but savvy travelers no longer find them worth the fees and trouble.
Emily Starbuck Crone is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @emstarbuck.