5 Money Mistakes Travelers Make—And How To Avoid Them

It used to be that the only thing you needed to worry about when using money abroad was getting a good exchange rate.

These days, international payments are much more complicated. Should you rely on credit or debit? Does it make sense to withdraw from an ATM and risk hefty service charges, or should you BYOC (Bring Your Own Cash)? Should a bill be paid in dollars or the local currency?

To make sense of the do’s and don’ts, we consulted personal finance and travel experts for ways to avoid money mistakes while overseas.

1. Not Checking in with Your Credit Card Company

The only thing worse than encountering a cash-only establishment with an empty wallet? Having your card denied. Yet this is an all-too-common occurrence for travelers whose charges trigger anti-fraud alerts. How to avoid this? Alert your bank or card company to your travel plans. This way they expect purchases from a foreign country. “Remember, your bank really does want to protect customers from bogus charges, so if someone suddenly starts buying things in Venice or Venezuela, that looks suspicious,” says Larry Olmsted, a Forbes travel reporter.1 “If you’ve let your bank know in advance, this won’t be a problem.” Be sure to include any layover locations as well.

2. Making Purchases with Your Debit Card

Debit cards can be great for folks who don’t like to pay a hefty bill at the end of the month, but they’re not so great when traveling. Why? Debits are deducted from your account in real time, which means that if a salesperson makes a mistake, or you decide to make a return, that cash might not be available for several days, leaving you stranded if you want to tap an ATM or spend close to your limit.2

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3. Being Fooled by “Free Withdrawal”

“There are lots of good reasons to mainly use credit cards internationally, but you always need some cash,” says Olmsted. “Most travelers today know that the best and cheapest way to get cash in foreign currency abroad is from a bank ATM machine. However, in recent years, non-banks like currency broker Travelex and ITT MoneyCorp have started putting machines that look just like bank ATMs in airports with big signs that say ‘Free Withdrawal.’ What they don’t say is that the exchange rate is horrible, as much as 11-14% above normal. These machines can be big scams, and they are now common in most European gateway airports, where banks’ arrival-hall machines have been entirely replaced by ATMs from foreign exchange companies. Wait until you get out of the airport or see a machine operated by an actual bank, even a local one.”

4. Forgetting to Ask Your Bank to Raise Your Withdrawal Limit

Chances are, you’ll be deviating from your normal spending habits while in a new city or foreign country, dining out for most meals and making unexpected purchases in cash. The last thing you need is to head to an ATM only to discover you’ve reached your withdrawal limit. Avoid that by contacting your bank before you hit the road and asking for a temporary lift on your limit so you can confidently spend on purchases big and small.3

5. Charging in Dollars

It seems handy: charging that six-course tasting menu on your last night in Rome in dollars. However, this is something you want to avoid. That’s because the practice, called Dynamic Currency Conversion, involves high, often undisclosed exchange rates and vendor commission4, on top of any foreign transaction fee your credit card may have.5 A better bet: Pay in the local currency, which is subject to standard exchange rates.

Resources:

1http://www.forbes.com/sites/larryolmsted/#1f375baa7060

2http://www.fodors.com/news/exchanging-your-3870

3http://www.fodors.com/news/exchanging-your-3870

4http://www.moneycrashers.com/using-credit-cards-overseas/

5http://www.fodors.com/news/exchanging-your-3870

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. 

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