Dealing with money while traveling abroad can be tricky.
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.
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!
When traveling abroad, there’s so much to consider. Will my credit card work? Which credit card is the best? Should I use my debit card? What’s the best way to exchange cash? Are ATMs safe to use?
I’ve interacted with at least 8 currencies on over a dozen trips and made numerous money, currency, and credit card mistakes. Don’t repeat my mistakes! With these international travel money tips, you can have a more enjoyable trip and save money!
Selecting a credit card for international travel
In my opinion, selecting the right credit card is the most important financial decision when taking an international trip.
If you read only ONE of my international travel money tips, make it be this one!
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.
When I select a credit card, the perks I’m interested in are:
- No foreign transaction fees
- Easy-to-redeem points
- Valuable points! For instance, the points earned from the United card tend to be more valuable than the Delta points
- Rental car damage coverage – bonus points for primary coverage instead of deductible coverage
- Airline perks – if you fly a lot, getting the credit card for the airline you use the most can get you a lot of intangible perks
- Cheap (ish) annual fee – I use my credit cards enough that paying the ~$95 annual fee is worth earning extra points
My two favorite credit cards are my United MileagePlus Explorer card and my CapitalOne Venture card. If you’re interested in either, check out my referral links! With United, you’ll earn 40,000 bonus miles after reaching a spending minimum. CapitalOne doesn’t have a signup bonus but they are my favorite credit card. Unparalleled customer service and super easy-to-redeem points make them my day to day card. If you’re interested in checking them out, sign up here. In both cases, I will earn a referral commission should you sign up.
Cash is king – always carry some
Unfortunately, credit cards won’t always be useful. 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.
In addition to that, hostels often require cash on arrival and almost all hotels charge a local tourism tax of a few USD equivalents per night upon checkout, and cash can be useful for that.
Moral of the story: you should always have some sort of local currency on you, even if it’s just a small amount.
I think it’s worthwhile to arrive with cash on hand. I recommend you using a currency conversion service to land with about $50 USD equivalent. All other cash should be obtained after arriving.
The BEST way to get cash while abroad
This is my second most important international travel money tip!
The absolutely 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%. I think that fee is fine for small conversions (like your arrival cash), but on any amounts larger than that, it’s burdensome and unnecessary.
In the past I would try and find an ATM machine at the airport. This ended up being a ripoff more often than not because the machines were usually Forex machines (foreign exchange machines). They give you a reduced conversaion rate AND charge a fee, just like that kiosk in your local mall.
I think it’s worthwhile to just land with some cash, settle into your hotel, and find a true ATM once you arrive. The best ATMs are BANK ATMs. You’re much less likely to have your card get skimmed if you visit a true, authentic bank ATM.
Your accommodations should be able to point you in the direction of a local ATM if you can’t find one. Of course, before you leave, make sure you know your debit card PIN AND tell your bank that you’ll be using it!
How to process credit card transactions when abroad
It doesn’t matter where you are, you will get asked if you want to pay in USD or the local currency.
You may feel tempted to pay in USD because you naively think your bank will appreciate that. Or maybe it feels more comfortable. Or, perhaps, paying in USD will tell you exactly what you’re paying without that pesky mental math.
99% of the time, you should transact in the local currency.
This applies at the ATM, the bank, the cute cafe down the street, the designer store you’ve always dreamed of visiting, and your hotel. Anywhere you go, it will ALMOST always pay off to pay in the local currency.
Your bank is smart enough to convert the current spot market rate on the currency back to your account. What that means is, if the instantaneous rate is 0.90€ per USD, you will pay that. Their system talks to your bank’s system, converts it in real-time, and the transaction is done.
If you opt to pay in USD, however, the establishment will charge you their own conversion fee. You may end up getting 0.85€ per USD instead of the current market rate.
What does that mean? 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 $63.70USD. That $63 sounds reasonable, but the actual spot market value of 54.15 EUR to USD is $60.17. If you select USD, you’re essentially paying a $4 penalty for no reason.
I always pay in the local currency and it’s only been a bad deal for me once. When I visited Xel-Ha, the shop’s conversion rate was outdated and more generous than the spot market rate, so I ended up overpaying because I paid in Pesos. Annoying, but it happens.
Tips for doing currency conversions in your heard
It’s important to find tricks to simplify the mental math when doing currency conversions in your head.
In some cases, it’ll be super easy. 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?
I don’t like feeling vulnerable with my money. 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.
If math isn’t your thing, there’s an app for that! Check out the many currency conversion calculators on the app store.
The last tricky thing with money abroad (in Europe, at least) is VAT (value-added tax) and VAT refunds.
What are Value-Added Taxes (VAT)?
In Europe, many purchases will be subject to a value-added tax. It is usually pretty steep – at least 15% but oftentimes 20%+. Luckily, you don’t really need to know how much it is because the list price always includes the VAT.
If you aren’t a resident of the EU & certain individual transactions cost enough, you’ll 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 the paperwork and another 10 minutes in line.
VAT refunds are not always easy, however. In fact, I have only sought a VAT refund in Iceland because all the other countries made the process so cumbersome.
When to ship goods back home
If something is shipped back home, it is considered an export. Recall how VAT is not applied to exports?
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.
If you’re buying something valuable, it may be worthwhile to inquire about shipping. In many cases, the shipping cost may be only marginally more expensive than the VAT AND you won’t have to worry about protecting your item or seeking a VAT refund!
I know dealing with money while traveling abroad can be tricky, 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.
Money isn’t all you need to worry about while traveling abroad. Curious how to use your phone while traveling internationally? Check out my post on staying connected abroad! And while you’re trip planning, check out my post on planning the perfect trip!