Have you ever come home from a trip and cringed when you saw all those extra charges and fees on your credit card? You need a no foreign transaction fee credit card.
Maybe that sweet deal you scored on an Italian leather jacket evaporated when you added in the unanticipated foreign transaction fee and subpar exchange rate.
Or you got double dinged with surcharges—by the bank in country and yours at home—every time you withdrew money from an ATM. Or maybe you tried to exchange your extra Euros for US dollars once you returned. Only to hand over one-third of it (!) in currency exchange fees.
If so, you’re not alone. I overpaid plenty of times before I got smart about how to eliminate all these annoying fees. It’s one of the best ways to save money when traveling.
Best credit card to use overseas? Here’s my hard won advice for how to put all that money back into your pocket—or better yet, a money belt— for the fun stuff.
1. How to Find a No Foreign Transaction Fee Credit Card
When you make a purchase on a credit card overseas, your credit card will tack on an additional fee of one to three percent. In fact, three percent is pretty common. That may not sound like much, but it adds up over the cost of a trip. If you spend $3,000, that’s $90 in fees you could’ve spent on a three-course lunch or bungee jumping!
Want to ensure there is no foreign transaction fee? Apply for a card that won’t charge them. There are many. Choose one with a microchip for extra security while you’re at it.
And while we’re on the topic of security, consider carrying that card in an RFID (radio frequency identification) protector sleeve to deter thieves from electronic pickpocketing. They’re inexpensive on Amazon. Or get an RFID blocking wallet. I recently purchased this phone case that holds my cards and does the job.
The best travel credit cards also come with a host of additional benefits. (Hello free flight!) These range from the ability to earn airline miles from purchases and travel insurance to airport lounge access and annual fees credited back to you for travel purchases. (See more on 5 ways to save money on airfare in my post here.)
Quick related tip here: When you purchase something in a shop overseas, they may ask if you’d prefer to pay in the local currency or your home currency. Always choose the local currency to avoid a credit card conversion fee of up to three percent. And that’s often on top of the foreign transaction fees we were just discussing! Sheez.
2. Get smart about bank surcharges.
Tourists can be easy targets for thieves at ATMs so be smart about it. That friendly, helpful person may have just scanned your card with a skimmer in their pocket.
No need to be paranoid though. There are so many honest and helpful strangers you’ll meet when you travel. I can’t imagine how many trains I would’ve missed if kind locals hadn’t stepped in to show me how things worked. So don’t be afraid to connect. Just increase your odds of safety by using the ATM inside the bank.
Here’s the deal with fees charged by banks when you travel out of country. Your bank or credit card back home will typically charge you an extra $1 to $5 each time you use an ATM network in another country. They’ll charge an international ATM fee plus a percentage of the amount you withdraw.
Credit unions frequently have lower charges than major banks. However, my credit union belongs to a smaller ATM network and therefore, my card doesn’t always work in some countries. That’s why I always have a back-up credit card in case I need a cash advance.
In addition, the bank you’re using abroad will also charge a currency conversion fee that typically ranges from one to three percent. And that local bank where you’re withdrawing money may tack on additional fees of their own! What’s a traveler to do?
First, find out from your bank before you leave home what it will cost to use your ATM card overseas. Ask for any tips to reduce these costs. (Sometimes, for example, you can save by using a local partner bank affiliated with your bank back home.)
Next, minimize the number of withdrawals you make on the trip. By withdrawing large amounts just a few times, you’ll cut fees considerably. This can be tricky though since you don’t want to end up with a lot of foreign currency at the end of your trip, but more on that in a minute.
If you want to be sure you pay zero ATM fees, consider opening a checking account with Charles Schwab as they will credit back an unlimited amount of ATM fees to your account at the end of each month. There are other great online banks too.
Because Schwab is a brokerage, you’ll technically be opening up an investment account, but no worries. You don’t ever have to use it.
There is no minimum balance required in either the brokerage or checking account. And it’s quick and easy to apply online. Then just link your current bank to the account and transfer money to Schwab before or during a trip and you’re ready to go.
3. Cut currency exchange fees.
You know those easy-to-spot currency exchange terminals in airports? They are the absolute worst place to get cash upon arrival in a foreign country. They’ll gouge you with fees in the worst way, so consider it an emergency option.
If you prefer to have currency upon arrival, you can get it at home before you leave. AAA typically carries close to 100 currencies and gives a discount on service fees to members (but it’ll still cost you). You may be able to get currency at your bank as well. Ask about service fees before you commit.
Personally, I prefer to use an airport ATM machine upon arrival and I’ve never been stuck. Just be aware of your surroundings when you’re withdrawing cash at airports as they’re another prime spot for tourist theft.
If you have a travel partner, you might ask them to keep a look out for you. But no worries if you’re traveling solo. You’ve got this!
Wondering what to do with that leftover currency post-trip? Ask your bank before you go if they will buy it back upon your return. Or, call a currency exchange store to find out what you’ll pay (likely a lot).
These days, I just work to minimize leftover cash and then hang on to it for a future trip. What a great excuse to go back, right? (Or shop your Christmas list in the duty free section of the airport before you leave!)
Not sure when you might use it next? Consider donating it to Unicef’s Change for Good program. This innovative program, which partners with 10 international airlines, has raised more than $150 million to improve the lives of millions of children around the world since 1987.
In the U.S., American Airlines is Uncief’s program partner…meaning that you can conveniently donate that cash when you board the plane. But if you’re not flying American, just mail it to the address in the Unicef link above.
I’m so glad there’s this one bright spot among the waste that often comes with currency exchange.
Can you think of a better way to pay a great trip forward?
If you’re looking for other ways to save money traveling, check out my round-up of travel bloggers’ best ideas for how to afford more travel.