- Credit cards with no foreign transaction fees, like the Chase Sapphire Reserve and the Wells Fargo Propel American Express® card are the best way to make a purchase outside of the United States due to low costs and added fraud protections.
- ATMs usually give the best exchange rate — just look out for fees charged by your bank for using an international ATM.
- Cash is a good backup plan, but avoid using your debit card when traveling. If a thief gets your debit card, they can drain your account and it’s difficult to get the money back.
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I love the feeling of stepping off a plane in a new country. After stretching out from a long flight, I love winding my way through the airport following signs in exotic languages, through a hopefully quick and easy customs and border control, and into the expansive terminals that usher new visitors onto the next phase of their trip.
One stop I always try to make in that terminal is at an ATM. While I know I can use my credit card to pay for a taxi or use my phone to hail a ride here in the US, money isn’t always so simple abroad. Here’s how I handle my money when traveling anywhere outside of the United States.
Always use credit when you can
Credit cards are hands-down the safest and best way to make any purchase abroad, when it’s an option. If you have a card with no foreign transaction fee, you’ll generally get a competitive exchange rate with all the $0 fraud liability most US cards offer.
Tourists are often a target for payment scams and fraud. I was on a trip at the same time my sister was traveling and both of us had card numbers stolen in the same week! Because we used credit cards, we were not liable for any purchases we didn’t make.
If you use a debit card and the number is stolen, the bad guys can drain your checking account. If you do get the money back, it can take months. Credit card protections are more extensive and easier to use. And in many cases, you’ll get additional purchase protections or travel coverage. That’s why you should always use credit when you can.
Note that you shouldn’t be paying fees for transactions outside the US, and there are plenty of no-foreign-transaction cards that can be used all over the world without incurring those fees. Some of the best available options are:
- Chase Sapphire Preferred Card ($95 annual fee)
- Chase Sapphire Reserve ($450 annual fee)
- The Platinum Card® from American Express ($550 annual fee)
- Gold Delta SkyMiles® Credit Card from American Express ($0 introductory annual fee for the first year, then $95
- Wells Fargo Propel American Express card ($0 annual fee)
Avoid exchange shops and get cash from the ATM
If you walk through downtown Jerusalem, where I spent a semester in college, you’ll see busy currency exchange shops dotted throughout the area. While it may feel safe and easy to walk in and turn your dollars into shekels, you probably won’t get a very good deal. The same is true of airport currency exchange shops, and virtually all exchange businesses when traveling abroad.
Like any business, currency exchanges have to make money. They typically do this by offering unfavorable exchange rates to customers. Big banks usually offer much better rates. You may be able to exchange cash in a branch, but it’s much easier to use your ATM card to get what you need.
My Schwab checking account doesn’t charge any ATM fees and automatically reimburses anything other banks charge. But even if your bank charges a modest fee, you may still save by getting your cash at the ATM.
Balance security, cost, and convenience
Travel is fun and exciting. With limited time to explore and enjoy your trip, you shouldn’t waste too much time dealing with money. If you are visiting most developed countries, you should be able to easily use your credit card to meet your money needs.
Cash is a good backup plan, and with the right checking account you can get it for the best possible rate from a local ATM when you land. Then you can move on to worrying about more important things, like where you can find the perfect piña colada by the beach.