Money while abroad

When I went to Hungary a few years ago, 1 USD was worth about 330 HUF (Hungarian Forints).  I remember I had to pay for my hostel in cash and the total owed was something like 55,000 HUF (roughly $160 USD).  I withdrew 100,000 HUF from the ATM and felt like a baller.  It came out in five 20,000 HUF bills, if I remember correctly.  I had never felt richer, even though that money was not actually super valuable.

Money can get tricky abroad.  Most of my travels have been to Europe, and despite being in the EU, many countries have their own currencies.  Iceland has the krona, Czechia has the koruna, Hungary has the forint, Switzerland has the Swiss franc (yes, I know Switzerland isn’t an EU member state) … and that’s just the countries I’ve been to!

One trip I traveled from the Czech Republic (now Czechia) to Germany to Austria to Hungary.  That means I had to use three different currencies in about as many weeks.  This can make budgeting & planning difficult!

In my opinion, the absolute most important part of traveling abroad is selecting the right credit card.  I’ve only been to one place that didn’t accept credit cards frequently, and that was New Orleans.  Otherwise, I think a credit card will be good for at least 95% of your purchasing needs.   Because of this, you need to select a travel friendly credit card.  This mostly means you need to select one without foreign transaction fees.  All the airline specific credit cards have this perk as far as I’m aware, so that’s a good place to start if you tend to be loyal to one carrier or airline alliance.  If you are not loyal, I would recommend a non-specific travel credit card.  I’m a huge fan of Capital One.  I have both their Venture Rewards & Signature credit cards (one is paid, one is free), and I’ve always been impressed with the convenience of using the card abroad, redeeming rewards, and customer service.

Credit cards won’t be useful for everything, however.  American credit cards have recently moved to chip systems, but these are not the same chip & pin systems used in Europe.  I’ve had a few experiences where my only option is to buy a train ticket at the kiosk and the kiosk won’t accept my credit card unless I have a chip & pin card.  In this case, cash may be used to get a really generous local to purchase a ticket for you.  Also, hostels often require cash on arrival and almost all hotels charge a local tourism tax of a few USD equivalent per night upon checkout, and cash can be useful for that.

You should always have some sort of local cash on you, even if it’s just a small amount.

The absolute best way to get cash is at an ATM once you arrive.  ATMs will give you the instantaneous market rate on conversions, less your bank ATM & foreign transaction fees.  In my case, that amounts to about $3 for an ATM fee and ~1% in foreign transaction fees.  If you go to a Forex machine or a currency conversion service, you’ll often end up paying more than 10%. 

Find a true ATM at the airport (not a Forex machine!) and pull out whatever amount you think you’ll need.  A little extra doesn’t hurt, because you can always finish up your last few days in cash (or make someone’s week with an extra generous tip).

On that note –

ALWAYS ALWAYS ALWAYS transact in the local currency.

ATMs and credit card machines may ask you if you want to pay in USD or the local currency.  Pay in the local currency.  Your bank is smart enough to convert the current spot market rate on the currency back to your account.  If you pay in USD, however, the establishment imposes their conversion rate and you’ll end up paying more.

For example, let’s say you and your significant other are dining out in Amsterdam.  The total between the two of you comes to 54.15 EUR.  You hand the waiter your card and he pulls out his card reader.  It will ask you if you want to pay 54.15 EUR or $63.87 USD.  That $63 sounds reasonable, but the actual spot market value of 54.15 EUR to USD is $61.51.  They are imposing a conversion fee by selecting USD.  Select the EUR and let your financial institution convert at market rates.  The same is true at ATMs.

Worth repeating: ALWAYS ALWAYS ALWAYS transact in the local currency.  Or, at the very least, ask what conversion the establishment is using and make your decision from there.

The EUR and CHF (Swiss Franc) are similar enough to USD to make quick mental conversions easy when shopping.  What I mean is, if you see a product for 100 EUR, you know it’s going to cost ~$110 USD.  It becomes more tricky when the currencies are drastically differently valued per unit.

Take the HUF, for instance.  That was hard for me to mentally convert.  I remember paying something like 7,000 HUF for groceries.  Is this a good price? Would I pay this in my home currency?

Find tricks to simplify the mental math.  What I ended up doing was taking off two zeros and dividing by three.  With that rough math, the 7,000 HUF bill is ~$70/3 USD or slightly less than $25.  In actuality, it was ~$21 USD, but I was close enough.

The last tricky thing with money abroad (in Europe, at least) is VAT (value-added tax) and VAT refunds.

If you’re spending enough, you will be eligible for a VAT refund.  When I was in Iceland, I think I was eligible for ~$50 USD in VAT refund.  Not a lot, but definitely not bad!

When shopping, some stores will have large blue signs indicating they participate in VAT refunds.  If they don’t have a sign, you can always ask.  Be sure to clarify what the spending threshold is to participate.  If you spend enough, they will provide the right documentation to claim a VAT refund.  You may need to provide proof that you are just a visitor to the EU.

Documentation will be provided that further explains the process for you in that specific country.  In my case, I compiled all my eligible receipts and went to the VAT refund booth at the Keflavik airport.  After checking out that my documentation was filled out correctly and that I had done everything else correctly, they issued my refund in Icelandic Krona. I just walked over to the bank next door and converted it back to USD.  Easy! All in, maybe 10 minutes to prepare them paperwork and another 10 minutes in line.

Another interesting thing about VAT, however, is that you don’t have to pay it if you’re shipping goods outside of the EU.

When I was in Switzerland, I purchased a cuckoo clock for about $250 USD.  All prices listed include the VAT, so I had anticipated having to go through the refund process.  When I asked how much shipping was, the store clerk said it would be about $60 to the US.  What was most exciting, however, was that I wouldn’t have to pay the VAT of ~$40!  So that made the shipping basically just $20 over the sticker price.  If I wanted to lug the cuckoo clock in my luggage, I would’ve had to pay full sticker price and try and find a way to get it home safely myself.  So keep that in mind if you’re buying something more fragile or valuable: ask if they have shipping options, and make sure the VAT is deducted off the purchase price.

I know a lot of this can be overwhelming, but find tricks to keep all the money stuff less confusing for you.  Even if you mess up once in a while, you’re probably only losing out on a little bit of money in the grand scheme of things.  Take things in stride and ask questions when in doubt, and most of all,  don’t let money woes ruin your adventure 🙂

Are there any other money questions that I haven’t answered? Ask in the comments below.


2 thoughts

  1. I would recommend having a backup credit card. This saved us a few times in France when the toll roads wouldn’t accept one, but accepted the other. (When I called my bank, they said they had no idea why my card would be rejected.) Also, I’m a big fan of getting currency from the bank before getting on the plane. (Not all banks sell foreign currency, so you may have to look around.) This is mainly because I don’t want to have to think about getting money once I arrive. There’s already so much waiting at the airport – for luggage, for customs & immigration, sometimes for the rental car – I just want to get the heck outta there and start my travels!! Having cash on me saves me a little time, plus, I’m usually jet-lagged and would probably struggle with something as basic as withdrawing money in that state. 🙂


    1. That’s a good point. I think there’s a lot of merit to arriving with cash to make that first day easier, but I would still recommend getting the majority of the currency at an ATM. Maybe I’m just cheap 🙂

      One of my friends was in Prague recently and they withdrew what they wanted – plus an extra zero! Oops!

      Liked by 1 person

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