Things to know for spending money abroad

Whether you’re studying abroad or taking a break from America to rack up life experience, getting smart on smart international management of your money can save you dough.

Q: What’s the deal with using plastic (credit or debit cards) abroad?

What to know — Foreign transaction fees. The café in Paris charges you in Euros, and your bank converts the charge into USD by the time you see the transaction on your bill. Notice the foreign transaction fee that generally ranges from 1 to 3% of your purchase. Are they avoidable? Sometimes.

Option 1

Fancy credit cards (read: cards with an annual fee ranging from $100-ish to $500-ish) often waive this fee as a perk of the card. If you travel a lot or plan to spend plenty of time abroad, a credit card with “no foreign transaction fees” is a good idea.

Option 2

Go local, meaning rather than your American debit card, open an account at a local bank that offers a debit card to use during your time in the country. You may have to jump through a few hoops (letter from your university, evidence of a local address, etc) but it’s a good option to avoid transaction fees on credit cards. You can also withdraw cash from this account at ATMs, the way you do in the US with your US accounts.

PSA: Call your bank before traveling abroad to let them know you’re taking off. Otherwise, if it sees your card suddenly pop up its spendy head in Madrid without warning, it often assumes your card was stolen, blocks your transaction, and freezes your card.

Q: What’s better: using cash or credit?

The short answer: credit cards preferably with no foreign transaction fees.

WHY: When currencies get converted (in cash or via a transaction on your plastic), you always lose a little to the exchange rate (aka FX or Foreign Exchange) — whether you’re at the bank or at an airport’s currency exchange, because they have to make money from their service. However...

If you use plastic instead of paper, at least you’re confident on a fair FX from your bank. When you roll in cash and need some when you need some, you often find yourself at a touristy currency exchange that doesn’t offer good rates or a random ATM that charges a hefty fee per withdrawal.

Who can perfectly estimate how much cash they need? So when you’re left with excess cash in the local currency at the end of your trip and want to convert it back to dollars, you subject yourself to FX again - losing a little BOTH ways.

Q: How do I shop in another currency?

Whether you want to eat that pasta in Rome or pray to that wood carving in Jakarta, get a feel for what quoted prices convert to in dollars. (EX: 13,681 Indonesian Rupiah...what do you do with that, if you didn’t know it equals $1?). Here are 2 easy ways to work out FX quickly:

1. Jot the FX down on your phone, for some quick math. Making it real with a “$1 = 0.92 Euros” example:

2. Google it, or download a currency converter app onto your phone! (EX: My Currency Converter, XE Currency)